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Slump in number of mortgage products on offer
09.02.09
The number of different mortgage deals available has slumped to only a tenth of its level before the credit crunch first struck, figures showed today.
There are currently just 1,542 different home loans available across the market, compared with 15,599 in July 2007, according to financial information group Moneyfacts.co.uk.
The fall in choice has been particularly acute for people looking to borrow a large proportion of their home's value, with the number of different deals available for people with just a 5% deposit diving from 1,079 in July 2007 to just three now.
Choice is also limited for people with a 10% deposit, as there are currently only 113 different mortgages available for consumers looking to borrow 90% of their home's value.
Instead the majority of lenders are demanding deposits of at least 40% if homeowners are to benefit from their best rates.
The latest slide in mortgage availability has been driven in part by lenders withdrawing their ranges of tracker products ahead of last week's interest rate cut.
But there have also been steep falls in product availability for people with impaired credit histories and so-called self-certification borrowers, such as the self-employed.
Lenders who provide mortgages to people with poor credit histories have previously offered a broad portfolio of loans to cover a wide range of circumstances, but many have recently cut back on their product choice.
There has also been an exodus among lenders from the self-certification market, possibly as they become nervous about the prospects for the self-employed during the recession.
There are now no variable-rate self-certification deals available, while the maximum loan to value ratios lenders will advance on fixed-rate products is 75%.
Among the 46 fixed-rate products still available in this sector, the majority charge rates of at least 5%, while in some cases interest can be as high as 10%.
Meanwhile, lenders continued to sit on their hands following the recent reduction in the Bank of England base rate to 1%.
So far, only a handful of lenders, including Lloyds TSB, Halifax, Nationwide and the Woolwich have agreed to pass on the 0.5% cut in full to their standard variable rate customers, while Royal Bank of Scotland, which includes NatWest, is reducing its SVR by 0.19%.
But around 90% of lenders with an SVR have yet to announce whether they will pass on any of the reduction to their borrowers on this rate.
Banks and building societies have also been slow to say if they plan to reduce their savings rates.
Only a handful of small players have so far announced cuts, while some providers that offer only one or two products said they will keep their rates on hold.
