As many as a third of mortgage deals have been taken off the market in just three weeks as a result of the Covid-19 crisis, according to price comparison site Moneyfacts.
Today (April 1, 2020), there are 3,654 total residential mortgage deals on offer from banks and building societies in the UK, down from 5,239 deals that were available on 11 March – a difference of 1,585.
Last week, the government issued guidance to postpone many house purchase transactions until the current social distancing measures have eased. As a result, many banks and building societies have agreed to extend mortgage offers where completions have to be delayed.
It has also resulted in a number of providers limiting their ranges for new customers to those products available for remortgage borrowers only.
Some lenders have made the decision to reduce their exposure to risk and withdraw their higher loan-to-value (LTV) products, with some providers now offering deals at a maximum of 60 percent.
Eleanor Williams, finance expert at Moneyfacts, said: “The recent withdrawal of many higher LTV mortgage products and home purchase products is hopefully a temporary measure while lenders reassess risk in this area of the market and work out what it will be possible for them to offer while the current restrictions are in place. With so much uncertainty at the moment, providers seem to initially be focusing on the support that their existing customers may need in the coming weeks.
“However, there may still be borrowers sitting on their provider’s standard variable rate (SVR) waiting to see what the impact of these rate cuts will be and by how much their monthly payments will reduce. With the difference between the average two-year fixed mortgage rate and average SVR standing at 2.39 percent today, the benefit of switching to a new deal while rates are low is evident for those eligible, and would protect these customers from interest rate volatility in the future.
“We have to hope now that the mortgage market is able to rebound as quickly as we have seen it contract, once we begin to come out the other side of the Covid-19 crisis.”