7% jump in number of mortgages on market

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The Independent Online

There has been a 7 per cent jump in the number of mortgages available since the beginning of the year, figures showed today.

There are now 1,715 different mortgage products on the market, up from 1,601 on January 1, according to financial information group Moneyfacts.

Halifax, part of Lloyds Banking Group, accounts for around half of the increase after making deals that had previously been for current account customers only more widely available.

But a number of other lenders across the market have also increased their product range.

Moneyfacts said the rise in the availability of different products showed that lenders were becoming more confident about assessing risk in the current market.

The average interest rate charged on mortgages has also fallen since the beginning of the year.

The average two-year fixed rate mortgage is currently charging interest of 4.85 per cent, down from 4.88 per cent at the beginning of January and 5.06 per cent on July 1.

The decrease has come despite the fact that swap rates, upon which fixed rate mortgages are partially based, have risen from 1.77 per cent to 1.9 per cent.

The average rate charged on a tracker deal has also fallen, dropping to 3.73 per cent, down from 3.77 per cent at the beginning of January, when it was unchanged from the beginning of July.

The biggest change in the average rates being charged is to fixed rate mortgages for people with only a 10 per cent deposit, with the interest charged on these dropping by 0.12 per cent since the beginning of the year, although at an average of 6.53 per cent they are still well up on the average rate of 4.92 per cent for those with a 25 per cent deposit.

There has also been a 0.1 per cent drop in the average cost of a fixed rate deal for people with only a 15 per cent deposit to 6.31 per cent.

Yorkshire Building Society was the latest lender to slash its rates, reducing the interest it charges on fixed rate and tracker deals by up to 0.6 per cent.

It cut rates across all of its loan to value tiers, while its 3.59 per cent two-year fixed rate mortgage for people with a 40 per cent deposit has gone straight to the top of the best buy tables.

The group follows the UK's biggest building society Nationwide, which also cut its rates by up to 0.6 per cent on Friday.

Darren Cook, spokesman for Moneyfacts.co.uk, said: "Lenders seem to have got their confidence back about how to evaluate risk in the current market, particularly on products with higher LTVs.

"We saw this beginning to come in during the latter part of last year."

He added that recent house price rises had also helped to increase lenders' confidence.

Ray Boulger, senior technical manager at John Charcol, said: "There is undoubtedly an increase in competition with a number of new lenders currently in the starting blocks waiting for the gun.

"Additionally, lenders are far less dependent on swap rates for their new funding, but rather looking toward their savers to balance the books.

"It is also John Charcol's belief that lenders are becoming more comfortable with the wider economy, most notably the bounce in house prices and the expectation that interest rates will remain low for some time - resulting in far less repossessions than initially expected."

He added that underlying this was a modest improvement in wholesale funding.

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