The number of mortgage products on the market has reached a three-month low. Expected higher interest rates have led to market instability and caused lenders to pull products from the market.
On Monday there were 200 fewer residential mortgage products on the market than on Friday when the number had already dropped 300 in a week. Would-be borrowers have 4,686 mortgages to choose from, a low not seen since March 14 when 4,618 products were on offer.
The average two and five-year fixed mortgage also became more expensive on Monday, according to figures from financial information company Moneyfacts.
Not since the start of the year has the average two-year rate reached such a high of 5.72%. It’s the highest since the average two-year rate was 5.75% on January 9 and works out at an extra £35 each month.
Similarly, the average five-year rate rose to 5.41% on Monday, the highest since mid-January, Moneyfacts data showed.
Please use Chrome browser for a more accessible video player
The Bank of England set interest rate is now forecast by investors to reach 5.5%, rather than stay at 4.5% as was previously expected. This forecast is already being priced in by lenders and is causing rates to rise.
The Bank is anticipated to increase the base rate of inflation as latest official figures reported core inflation rose to a 30 year high of 6.8%, rather than falling in line with forecasts.
Read more:
Cost of living crisis: Homeowners face big rise in mortgage costs
More mortgage costs rise with ‘worse to come’
Elsewhere, more first-time buyers are turning to longer-term mortgages in an effort to afford a home but are being hit by more expensive interest rates.
Nearly one in five people buying their first home are taking out 35-year or longer mortgages, according to data from banking lobby group UK Finance.
Latest figures from March, showed 19% of first-time buyers signed up to 35-year or longer mortgages, an increase from 18% of buyers in February and 17% in January.
As a result, the proportion of mortgages taken out for more than 30 years by first-time buyers was around 55% in March.
Be the first to get Breaking News
Install the Sky News app for free
When records first began in 2005 just 2% of first-time mortgages spanned more than three decades.
The increase has been seen across the board as a record 8% of house movers have been availing of long mortgages since December last year, compared to 4% of movers in December 2021.
