Mortgage market: Smallest since credit crunch started
Sunday, 12 Oct 2008 21:33
Where, oh, where have the mortgages gone?
The UK mortgage market is now at its smallest since the credit crunch started to bite.
There are now just 3,281 mortgage products on the market, according to data from Moneyfacts.co.uk.
Over the last two months the number of mortgage deals on the markets has fallen by 467.
However, there is some good news – as average
interest rates have fallen over the same period.
The average two-year fixed rate mortgage has fallen 0.58 per cent to 6.32 per cent, while the average three-year fix is down from 7.13 per cent to 6.54 per cent.
Two-year tracker rates have fallen 0.3 per cent to 6.28 per cent.
However, the better rates are going to mortgage deals with low loan-to-value (LTV) levels – as lenders keep an eye on falling house prices.
Darren Cook, mortgage expert at Moneyfacts, said: "We now see that the market is becoming largely risk driven, which is evident from the demise of many products with loan to values of between 95 and 90 per cent.
"Property values are still falling and there is no indication at which level they will bottom out. Fears of negative equity and diminishing values of supporting security has resulted in providers hedging themselves by offering more mortgages that require a minimum deposit of 40 per cent."
Mortgages with a maximum LTV of 60 per cent, Mr Cook explained, have increased by 84 per cent to 155 products.
"Unfortunately for borrowers, this is where the better rates are to be found today," he said
"Choice may be reducing, but there are still enough products out there for borrowers to try and find a suitable deal that suits individual circumstances.
"The difficulties lie in the lack of liquidity within the market and providers having no appetite or being unable to lend on a larger scale. In essence, the price list shows that mortgages are getting a little cheaper, but the stock rooms are currently nearly empty. "
While rates have been falling, mortgage fees have been rising.
On two-year fixes and two-year trackers, fees are up to £1,149 and £1,134 respectively.