Mortgage products available

There has been a gradual increase in the number of mortgages offered in the market since the summer with the most noticeable increases occuring in the fixed rate and bank base rate tracker mortgages sectors. However the choice is still a far cry from the 5,332 different mortgages that were available at the beginning of 2008.

Based on comparisons with the numbers available in January 2008 the sector that has been hardest hit has undoubtedly been sub-prime mortgages which boasted an impressive choice of 1,520 mortgages two years ago but now barely scrapes into double figures. The number of Buy-to-Let mortgages available has also suffered and is only at one-fifth of those available two years ago.

The mortgage market has suffered greatly as a result of the infamous 'credit crunch' and there are a number of factors behind the dramatic fall in the number of mortgages available.

Firstly access to funds for lenders has been severely curtailed with the result that there are only a small number of lenders that are doing the vast majority of net lending and in many cases the intense level of competition for new customers is sadly lacking with the result that the profit margins on new business for those that are lending is now very much greater. The margin on bank base rate tracker mortgages are substantially higher than

We've also seen massive differences in the interest rates charged based on the proportion of equity that the borrower is able to muster. The keenest rates are now restricted to those with equity of at least 25% and as the level of equity decreases below that the interest rates on offer shoot up.

Those lenders that are seeking new business are very much focussing on quality rather than quantity and finding a lender willing to offer a new mortgages to someone with a very high Loan-to-Value (5% equity equates to a Loan-to-Value of 95%) or to those with credit blemishes is extremely.

One knock-on result of all this is that borrowers with high, or even negative Loan-to-Value percentages, are effectively locked into their existing lender and will, once their initial rate period ends, move on to their lender's standard variable rate (SVR). There is an astonishing variation in the range of SVRs with, at the time of writing, the lowest at 2% and the highest at 6.45% in terms of mainstream lenders. The average SVR is a shade under 4.70%. If you happen to be with a lender who has a competitive SVR you're lucky but clearly the same cannot be said for those paying in excess of 5% or 6% particularly if they're unable to remortgage elsewhere.

There are signs of stirrings from slumber in the mortgage market but it looks like it may take quite a while before we get back to the days of four or five thousand different mortgages being available.