Defaqto: Buyers may struggle to meet criteria due to reduced product numbers

Jessica Bird

May 15, 2020


As restrictions start to lift, the property market is reopening, but the mortgage market has shrunk during lockdown, potentially making it harder to find a mortgage, according to analysis by Defaqto. 

In March 2020, there were 189 remortgage products at 90% loan-to-value ratio (LTV), where today there are only 34.

The number of mortgages has fallen by 47% during lockdown.

Borrowers therefore have fewer options to choose from and may find that lenders are more picky about applicants meeting their criteria.

While there are fewer mortgage products available now than before lockdown, the rates are still very good.

With the base rate falling in March, the best 5 year fixed deal is just 1.99% compared to 2.28% 3 years ago.

The number of fixed products available for remortgage customers has also shrunk, from 1,003 in March to 657 today

However, borrowers may be able to save substantial amounts by moving their mortgage, even if they do have to work harder to satisfy lenders’ criteria.

For example, in 2017, the best 5-year fixed rate was 1.69%, which would be an average monthly repayment of £613, based on a £150,000 loan on a property worth £250,000.

Today it is 1.44%, which could translate to a saving of £17 a month, and £204 per year.

Currently, there are virtually no 95% LTV remortgage products available in the market, but this may change as physical valuations are now possible.

Katie Brain, banking expert at Defaqto, said: “For those looking to get on the housing ladder, this could offer a rare opportunity to get a home at a good price and get cheap finance on it too.

“While buyers and sellers will need to follow government guidelines to ensure viewings are done safely, this could be a real opportunity for some.

“For homeowners looking to cut costs, this could be a good time to remortgage.

“The range of products available has shrunk but the rates are at an all-time low, which could translate to some serious savings for those looking to fix.

“We are still in such uncertain times and anyone looking to apply for a mortgage should speak to a financial adviser who can assess their needs and recommend an appropriate product.”

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