Double-whammy affecting mortgage borrowers – Defaqto

Mortgage borrowers are being hit with a double-whammy of higher interest rates and fewer products, according to new analysis by Defaqto.

The financial information and technology expert highlighted that rock bottom interest rates are disappearing from the mortgage market, which may be the start of an upward trend.

Defaqto highlighted that mortgages have been getting more expensive over the last few weeks, and stated that the average two-year fix at 75% LTV is now 2.33%, compared to 2% on 6 April.

While Defaqto suggested the trend may seem like a small shift, its analysis revealed that the average home bought with a mortgage now costs £585 more in interest over two years than it did at the start of the summer.

First-time buyers are the worst hit group as not only did the analysis reveal that mortgages are more expensive but there are also far fewer products available to them right now. Defaqto stated that the total number of mortgage products available has dropped by 55% since January – from 2477 products to 1099.

Defaqto banking expert, Katie Brain, commented: “Although the Bank of England base rate hasn’t moved since March and there is talk of ‘negative interest’ rates coming in, this is not the case for mortgages.

“Unfortunately, there is so much demand right now that lenders do not need to offer the incredibly low rates we saw earlier in the year. This could be the beginning of an upward trend in mortgage rates, as we are seeing rates creep up across the board.

“For anyone looking to get a mortgage right now, it is a particularly difficult time as the market is constantly changing with some deals only available for a few days at a time. It is worth remembering that interest rates are still at historically low levels. Although rates may have been cheaper a few months ago, they are still much lower than they were two years ago. It is best to be prepared and to seek independent financial advice to get the right product for your personal circumstances.”

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