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Bespoke Mortgage Advice

Maidwell Group

What do the latest interest rate rises mean for mortgage products?

Thursday 1st September 2022

UK lenders are pulling mortgage products to avoid being overwhelmed by surging demand from homeowners seeking to fix their payments amid record rises in UK mortgage rates.

Following the Bank of England (BoE) base rate increase on 4th August 2022, the sixth time in a row the rate has risen since December 2021, banks are having to constantly update their products and as a result pull many deals from the market. This means it is becoming increasingly more challenging to secure a competitive mortgage that’s right for you.

During the Covid-19 Pandemic, the Base Rate was cut to 0.1%, marking the lowest rate in 25 years. In December 2021 the Base Rate was increased to 0.25% as a means to combat inflation. This is when banks first started reacting and many began pulling products as they predicted further changes ahead. Since then, the rate has increased incrementally, reaching 1.75% on 4th August 2022, a 14-year high, with experts predicting it will reach 2% by the end of the year.

Some borrowers, typically with larger mortgages, are even paying penalties to exit their current mortgage products early so they can secure lower repayments.

Whilst the rise appears to be relatively small, the effect it has on the cost of borrowing can be the deciding factor whether to take a mortgage or not. When taking out a mortgage, even a seemingly small rise can add up to thousands more in repayments.

According to Moneyfacts UK, at the start of March 2022, there were 518 fewer mortgage deals compared to the previous month.

At the end of July 2022, it was recorded that there were less than 4,400 residential mortgage products available in the UK, down around 3.5% from the start of the month.

Lenders know if they retain the competitive products, they will be inundated so they withdraw their products in certain areas to allow their underwriters time to catch up before coming back to the market.

Other providers are pulling products because they have reached their capacity for funding, meaning they must go back to the markets to raise money at more expensive levels.

While there are still thousands of mortgage deals to choose from, les choice can mean that is it more difficult to find a deal that suits your requirements. This is particularly true if your case is more complex or you need to approach a specialist lender.

Experts suggest that the average shelf life for a mortgage deal is just 28 days. For many people this can mean that you find a mortgage deal that’s right for you, only to find that it’s no longer available when you come to applying.

How working with Maidwell Group can help you

As a whole of market brokerage, Maidwell Group has access to over 500 lenders, ranging from high street banks, private banks to specialist lenders. Our specialist brokers will source the best mortgage product for you and manage the whole process from application through to completion, so you do not have to worry.

Some products are also only available through brokers, and with us being in regular contact with the lenders, we are kept up to date with product changes so, if your preferred product is about to be withdrawn, we can act quickly to try and secure it for you in time.

If you would like to know more click here speak with our team.

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