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Mortgage choice widens by 61% over five years

  • 08/08/2017
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The number of mortgages on the market has jumped 61% since April 2009, when products hit an all-time low of 1,209. Product numbers have risen over the last 15 consecutive months to hit 4,657 in August, according to Moneyfacts trend data.

Product numbers have risen over the last 15 consecutive months to hit 4,657 in August, according to Moneyfacts trend data.

Charlotte Nelson, finance expert at Moneyfacts, said: “The numbers this month were boosted by several lenders entering the three-year fixed rate market, which saw the number of those deals increase by 48 products to 439.

“With the two-year fixed rate sector still seeing heavy competition, providers are starting to look elsewhere, and the three-year fixed rate market offers providers an opportunity that some have used to branch out.”

Nelson added the rising chatter about an incoming Base Rate rise meant borrowers were assessing their options but a five-year fix may be too long for some.

“A three-year deal can bridge the gap for those wary of fixing for longer. Providers knowing this are tapping into this previously underdeveloped market,” Nelson continued.

“With the average three-year fixed rate standing at 2.54% in August, borrowers will need to decide whether the extra year’s security is worth a 0.31% premium compared to the average two-year rate of 2.23%.”


Four-year fixes

Coventry Building Society launched its first-ever four-year fix, with a 65% loan to value (LTV) at 1.69% and a 90% LTV at 2.55%, both with a £999 product fee.

According to Moneyfacts, Chelsea Building Society is the only other lender offering four-year fixed-rate mortgages on the open market, with its 65% LTV product at 1.64% with a £995 fee. Lloyds Bank offers existing borrowers four-year deals, starting at 2.39%.

“The four-year fixed mortgage market is very limited right now, but it could be an option for lenders to branch into if competition is fierce for a five-year fixed, where prices start at 1.59%,” Moneyfacts spokeswoman Rachel Springall added.

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