March 11, 2010
More Mortgage Products Available - But Is It Enough?
The number of mortgage products available for borrowers to choose from continued to increase last month.
According to financial data firm Moneyfacts, there were 1,798 different mortgage products on the market by the start of March, an increase of 6% on a month ago and 68% more than one year ago.
There are still very few mortgages available at 95% loan-to-value, but there has been considerable improvement in the availability of deals at 85% to 90% loan-to-value.
In fact, there are 90% more mortgage products on offer for those with a 10% to 15% deposit than there were a year ago, at 489.
"There are a growing number of mortgage providers who are becoming a little more accommodating with their credit criteria and this bodes well for consumers who will benefit from a growing competitive mortgage market," says Michelle Slade of Moneyfacts.
"It is pleasing to see that the average mortgage rate is falling at the same time as deposit requirements are getting smaller," she adds.
A number of lenders have reduced the interest rate charged on some of their mortgages in the last couple of weeks, including Lloyds, RBS, Cheltenham & Gloucester, Northern Rock and Alliance & Leicester. The cuts have been between 0.1% and 0.5%.
In further evidence that lenders are loosening criteria, RBS has also hiked its maximum advance for first time buyers from £150,000 to £300,000.
"The biggest reductions in interest rates have tended to be at the highest loan-to-value (LTV) levels, at 85% in particular," says Ray Boulger senior technical manager at mortgage broker John Charcol.
"Increasingly in the last few weeks, some lenders have improved their offerings over 75% LTV, which is down to the consideration that it is more commercially viable - the risk is that much less," he adds.
