Deals on Mortgages are at their highest level since March – tips on how to get the best deal

If you are looking for a new mortgage deal, now is the time as they have the most number of deals to choose from since the pandemic began impacting the UK economy last March, data has shown that the number of deals is at an 11-month high.

The data being released shortly in the Moneyfacts UK Mortgage Trends Treasury Report, has found that there are currently 3,215 mortgage deals available, which is the highest number since March when there were 5,076 deals in the market.

The most popular in deals over the last few months are found on mortgages that need a 10% deposit/equity – 90% loan-to-value (LTV) – which is great news for all the first-time buyers, as 90% LTV deals are mainly aimed at this market. As Eleanor Williams, finance expert at Moneyfacts.co.uk, explained: “Those with 10% deposit or equity might be especially pleased to note that this tier has, for a second month, seen the largest uplift in availability. With products at this level often favoured by first-time buyers and traditionally being seen as higher risk for providers, willingness to extend lending in this risk bracket could be an indication that lenders have confidence in the sector, despite ongoing, wider economic uncertainty. This is echoed by the average two and five year fixed rates at 90% LTV seeing the largest fall of all the lending tiers, reducing by 0.09% and 0.07%.”

Mortgage rates rise

Although the average rate on two and five year fixed mortgage at a 90% LTV fell month-on-month, down from 3.65% and 3.79% in January to 3.56% and 3.72% in February respectively, the average rates across all LTVs have increased.

Saying this, the average rate rise was only fractional, increasing by 0.01% on all two year fixed LTVs and by 0.02% on all five year fixed LTVs month-on-month. “At 2.53%, the two year fixed overall average rate is now 0.11% higher year-on-year, while the five-year equivalent at 2.73% is equal to where it sat in February 2020,” added Williams. “Therefore, while these rates have risen again, the increases are of just 0.01% and 0.02% this month, which may be a sign of the start of some stability in the market, especially when compared to the drastic monthly increases witnessed over the course of last year.”

How to get the best mortgage deal

When looking at mortgage deals, it is important that borrowers take into account a range of factors and not just the rate. For example, product fees and incentives may make a slightly more expensive deal a more attractive offer than a lower rate on a deal that has high product fees and does not offer any incentives. For those unsure about which deal is best for them, speaking to a mortgage broker, who will be able to take the borrower’s unique circumstances into consideration when suggesting deals, may be a good option.

As well as this, borrowers should be aware that although the rates on two year fixed deals are still normally lower than five year fixed deals, the five year deal may be the better choice in the long-run depending on the borrower’s needs. For more information about which is the best option, read our story that looks into whether borrowers should choose a two or five year fixed deal .



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