- Total number of mortgage products passes 15,000 for the first time since 2008
- Broker products drive growth with a 16 per cent monthly rise while direct products fall 2 per cent
- Fixed rates continue to fall to records lows
The total number of mortgage products has passed 15,000 for the first time since the recession, according to the National Mortgage Index from Mortgage Advice Bureau – the UK’s best known broker brand. The data shows there are now more products available for mortgage borrowers than at any point since 2008, as competition among lenders intensifies.
In August, there were 15,838 mortgage products available in the market: a 10 per cent increase from July (14,395) and the biggest monthly percentage rise since April 2011. This was largely driven by 16 per cent (1,520) growth in broker products from July to August to reach 11,257.
Graph 1: Total number of products reaches post-recession record high, jumping by 10 per cent from July
Despite the leap in broker products and the total reaching a post-recession high, the number of direct-only products dropped by 2 per cent from 4,658 in July to 4,581 in August. As a result, brokers’ share of the total product range jumped from 68 per cent to 71 per cent, while the direct-only share fell from 32 per cent to 29 per cent.
The data is another sign of intermediaries’ growing importance in the mortgage market. According to the figures from the Council of Mortgage Lenders (CML), brokers’ share of loans in Q2 2015 was 69 per cent, up from 62 per cent a year earlier.
Table 1: Broker products increase by 16 per cent in August, while direct products fall by 2 per cent
With product numbers now at their highest since the recession, the Index shows average rates continued to fall to all-time lows during August, as lending competition and the 0.5 per cent base rate continue to drive pricing downwards.
Two year fixed rates saw the biggest annual fall to 2.68 per cent in August, dropping by 103 basis points (bps) year-on-year from 3.71 per cent in August 2014. Three year and five year fixed rates also fell to record lows last month, with three year pricing reaching 3.11 per cent (down by 68bps year-on-year) and five year pricing reaching 3.24 per cent (down 97bps in 12 months).
Two year tracker rates also dropped 65bps from 2.66 per cent in August 2014 to 2.01 per cent in August 2015, although this was slightly higher than the low of 2.00 per cent recorded in July 2015.
Graph 2: Two, three and five year fixed rates continue to reach record lows
Brian Murphy, head of lending at Mortgage Advice Bureau, said:
“There has been a seismic shift over the last year as brokers have become an even bigger gateway for customers hoping to secure a mortgage. The product range has never been bigger since the recovery began, and no single lender can hope to rival the choice available via a whole-of-market adviser.
“Rather than being overwhelmed by options, customers are increasingly leaning on brokers to do the legwork for them. Taking this step avoids the risk of consumers picking what looks like the most attractive headline rate, going direct to that lender and missing out on a wider choice of products that may be better suited to their needs.
“Fierce competition in the market is contributing to record low rates and a large volume of product launches. A base rate rise is still hovering in the background, but the second half of the year often sees lenders pricing with year-end targets in mind and looking to attract new business. Getting advice from a broker can help borrowers find the best solution from the thousands currently on offer.”