David Prosser's Outlook: The incredible vanishing mortgage

Sunday 23 October 2011 04:08
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Move fast if you're on the look-out for a new mortgage and you spot a decent deal – blink and there's a good chance you'll miss it. Take Abbey, which just a fortnight ago cut the cost of its fixed-rate mortgages. Yesterday, in an abrupt change of heart, those price cuts were reversed.

Not only are mortgage borrowers facing a shortage of funds from lenders – the Council for Mortgage Lenders expects total advances to be 40 per cent down on 2007 this year – but market uncertainty makes it tough to keep track of who offers what.

This time last year, according to personal finance data monitor Moneyfacts, there were 15,000 different mortgage products available, with the typical deal remaining on the market for 30 days. In a post-credit crunch world, Moneyfacts reckons there are now less than 3,900 mortgage products on offer, with the terms of each loan changing every 11 days on average.

This volatility poses a particular challenge for hundreds of thousands of borrowers whose fixed-rate mortgages come to an end over the next few months. It is currently impossible to say what sort of rates might be on offer in the short window when such borrowers must source a replacement deal.

The Bank of England insists its special liquidity scheme, through which mortgage lenders can tap around £50bn of short-term funding for mortgage lending, is not intended to push the market back towards last year's lending levels, but simply to stabilise the sector. On the evidence so far, the package has not even achieved this goal.

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