The mortgage market of the UK is showing new pictures every day due to the Coronavirus pandemic. This time it is about the drastic fall in the mortgage rates in the 2 and 5 year fixed rate deals. The figures for the two years fixed-rate mortgage is 2.09 % while for the 5 year fixed mortgages is 2.3 5% applicable to all loan-to-values.
The rate cut by the Bank of England twice in March aimed to control the impact of coronavirus on the economy. On 11th March the deduction was 0.25% which was previously 0.75% after a few days new change followed with a second cut on 19th March that was 0.1%. It has sponsored a vast and unprecedented drop in the mortgage rates.
Rate fall is good news for the first time buyers, but the issue is that the deals with 5% deposit amount have also reduced in number. Most of the lenders are asking for at least 10% for the down payment. The mortgage providers have pulled back their higher LTV (95%) products. This phase is easy as well as challenging for the first time fund seekers. People are relying on the working methods of the online mortgage broker companies that are trying to get best for their customers.
Heavy reduce in the quantity of available deals
The lenders at the starting of March pulled almost half of the mortgage products back. The number was in 5222, which reduced to 2566 at the starting of May. The demoralising change has contracted the number of options for home buyers.
The other reasons are also working aggressively in making the situation even more difficult. The need for social distancing has created obstructions in property viewing for the buyers and in valuation for the surveyors. In addition, the estate agents have to depend on virtual viewings, which is not sufficient to satisfy the property buyers. However, things are changing gradually, and the situation can come to normalcy in a short time.
Rates have dropped here too. The prices on the two-year fixed-rate mortgage have experienced a sharp fall to 1.97%. On the other hand, the five-year products have dropped to 2.20%.