Hundreds of mortgage deals pulled from market as lenders raise rates

Hundreds of mortgage deals pulled from market as lenders raise rates

The choice of mortgage deals on the market has fallen significantly over the past week, new figures show.

On Tuesday 30 May, there were 5,012 fixed and variable rate mortgage products were counted by Moneyfactscompare.co.uk, which is down from 5,385 a week earlier.

The finance data website said several providers have withdrawn selected fixed mortgage products in recent days and some have pulled their whole fixed rate range as a result of higher borrowing costs, fuelled by the Bank of England’s latest interest rate hike.
But the choice of mortgage products is still more than double the 2,258 deals counted in October last year, when many products were withdrawn amid market turmoil following the mini-Budget.

Mortgage market analysis

May-22 Oct-22 May-23 22-May-23 Today
Average two-year fixed mortgage 3.03% 5.43% 5.26% 5.34% 5.38%
Average five-year fixed mortgage 3.17% 5.23% 4.97% 5.01% 5.05%
Fixed and variable rate products – Total product count – all LTVs 5,087 2,258 5,264 5,385 5,012

Data shown is as at the first available day of the month, unless stated otherwise.
Source: Moneyfactscompare.co.uk

Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “Borrowers searching for a new deal may well be concerned about the latest developments in the mortgage market. Over the past few days, we have seen a few lenders withdraw selected fixed products, with some pulling out of the market, at least temporarily. Product choice has started to fall, and as may be expected, average fixed mortgage rates are on the rise.

“This volatility is down to the concerns surrounding future interest rate hikes, and lenders are reassessing their propositions. Consumers looking to refinance will find rates around 5% on average for a fixed deal, compared to around 3% a year ago. It is vital borrowers seek advice to assess the situation and to find a mortgage that suits their circumstances.”

Meanwhile, the buy-to-let market has also seen lenders pull fixed deals, and average rates are on the rise.
Within the buy-to-let mortgage sector: Precise Mortgages, Kensington, Kent Reliance, Hodge and Marsden Building Society have pulled selected fixed mortgage products over the past few days. Aldermore, Bank of Ireland UK, CHL Mortgages, Fleet Mortgages, Foundation Home Loans and The Mortgage Lender have pulled their entire fixed rate range.

Since the start of last week, the number of buy-to-let mortgages has fallen from 2,748 deals to 2,343. The average rate on a two- and five-year fixed buy-to-let mortgage has risen to 5.61% and 5.52% respectively since the start of May 2023.

Buy-to-let market analysis
May-22 Oct-22 May-23 22-May-23 Today
Average two-year fixed BTL mortgage 3.41% 5.57% 5.56% 5.58% 5.61%
Average five-year fixed BTL mortgage 3.56% 6.05% 5.52% 5.55% 5.52%
Fixed and variable rate BTL products – Total product count – all LTVs 3,374 988 2,715 2,748 2,343

Data shown is as at the first available day of the month, unless stated otherwise.
Source: Moneyfactscompare.co.uk

Springall added: “Landlords will be disappointed to see a drop in product choice and that average fixed rates are on the rise. The volatility surrounding interest rates towards the tail end of 2022 started to improve, but as it stands, average rates are expected to keep climbing because of the ongoing concerns over future interest rate hikes.

“Buy-to-let product choice dropped below 1,000 deals in October last year, in the aftermath of the fiscal announcement, so it will be a concerning echo of that period if choice plummets to such a low again. Interest rates are only part of the decision-making process when entering a buy-to-let investment, so it is always wise to seek advice to ensure it is the right time to commit to a deal.”


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