As concerns surrounding future Bank of England Base Rate hikes swell amongst lenders, the mortgage market is seeing a sharp drop in products available.
According to new research by Moneyfactscompare.co.uk, over 300 mortgage deals have been pulled in the space of a week, sending average fixed-rate mortgages rising simultaneously.
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.”
As per the research, the average rate on a two and five-year fixed mortgage has risen to 5.38 percent and 5.05 percent respectively since the start of May 2023.
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Ms Springall continued: “This volatility is down to the concerns surrounding future interest rate hikes, and lenders are reassessing their propositions.”
The Bank of England Base Rate hit 4.5 percent following the last Monetary Policy Committee (MPC) meeting on May 11.
The next Base Rate decision will be made on June 22, and many analysts forecast it may be raised to as much as five percent.
Ms Springall said: “Consumers looking to refinance will find rates around five percent on average for a fixed deal, compared to around three percent a year ago. It is vital borrowers seek advice to assess the situation and to find a mortgage that suits their circumstances.”
According to Moneyfactscompare.co.uk, the buy-to-let market has also seen lenders pull fixed deals, and average rates are on the rise.
Since the start of last week, the number of buy-to-let mortgages dropped from 2,748 deals to 2,343. Meanwhile, the average rate on a two and five-year fixed buy-to-let mortgage increased to 5.61 percent and 5.52 percent respectively since the start of May 2023.
Ms Springall said: “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.”
