Reports this week warned that the Eurozone crisis could cause the recent explosion in the number of mortgage products available on the market to go into reverse next year.
The Independent newspaper said that research carried out by Moneyfacts had shown an impressive 20 per cent increase in the number of available mortgages, with a particularly fast increase since the summer. There are some 3,523 mortgage products available from Britain’s building societies and banks compared with 3,038 products in June and just 2,869 in January. This increase has been matched by a fall in the average price of mortgages over this period, due to greater competition in the sector.
Mortgage brokers London & Country director David Hollingworth told the newspaper: “After the credit crunch, many lenders, although still on paper being open for business, chose to price themselves out of the market. Although there were lots of lenders out there, only a few were genuinely pricing their products to attract business.”
“But in the recent past this has changed markedly. The arrears weren’t as bad as first feared and money market rates have been low, which means that competition has hotted up, with more products available – and, crucially, at lower prices.”
As an example, he pointed out that in late 2010 the best value five-year fixed-rate mortgage offered rates of 4.4 per cent, whereas at present the Co-operative Bank is offering 3.39 per cent for the same fixed-rate five-year term.
Moneyfacts director Darren Cook also pointed out that “the number of higher loan-to-value mortgages has noticeably increased, giving some hope borrowers with smaller deposits, particularly first-time buyers.”
However, things may not be so rosy in 2012, according to some experts, who blame the ongoing crisis in the Eurozone.
John Charcol technical director Ray Boulger warned that “the longer the eurozone prevaricates over sorting out its financial mess, the worse this is going to get, which should have an upward pressure on rates in 2012, despite the consensus that there will be no rise in the Bank of England base rate next year.”