As rates rise, borrower choice continues to decline. There were 114 fewer deals available in September than were offered at the start of August. Compared to March when 5,222 residential products were available, this is a 54 per cent contraction in the market.
Over the last month, the average two-year fixed rate for all loan to values (LTV) has increased by 0.16 per cent, the largest monthly rise since July 2009.
The average two-year fixed rate for all LTVs has increased from 2.08 per cent to 2.24 per cent over the course of the last month.
Meanwhile five-year fixed rates have risen by 0.15 per cent to 2.49 per cent, the largest monthly rate increase in this product range since March 2011. Rates still remain lower than they were in March.
The average fee charged on all mortgage products, discounting fee-free deals, has increased for the fourth consecutive month reaching £1,032, the highest level since February 2013.
Eleanor Williams, finance expert at Moneyfacts, said: “Although mortgage lenders may have anticipated tighter margins in 2020 following the intense competition in the market over recent years, the unexpected impact of the global crisis has resulted in these constricting even further.
“During the first phase of the coronavirus pandemic, the industry leapt into action to support their existing customers with payment holidays and various other relief measures. However, we are now approaching the end of the furlough scheme, and with the potential impact this may have on household income for many, as well as the possibility of further concerns around a second wave and subsequent restrictions, lenders are bracing themselves for wide-spread financial concern.
“In short, the combination of rising rates and fees, dwindling product choice and a race to take advantage of the stamp duty holiday means that seeking independent, qualified advice at this crucial time would be wise to ensure that the best options for each individual’s circumstances can be pursued.”