Why is it so Hard to Find a New Mortgage Deal?

Using a laptop to look for a new mortgage deal

Anyone hunting for a new mortgage deal will notice there are significantly fewer products now than there were previously. Whether you’re looking for a new purchase or are switching mortgage deals for a remortgage, it’s a similar story. But why are banks and lenders reducing their options? And why are rates increasing so much?

With economic uncertainty coming at us from all angles, be it fuel, food or energy, the future of the housing market isn’t looking as stable as it has done over the last few years. In turn, lenders have reduced the number of deals on offer, keeping the focus on safer homeowners. 

At Stuart Brown Mortgages, we’re exploring this situation, what it means for your search for a new mortgage deal and the long-term outlook. Whatever the forecast, we’re always here to support you with any of your mortgage needs. 

How Many Options Have I got for a New Mortgage Deal?

While the outlook sounds alarming, there are still around 8,000 products on the mortgage market right now. Only around 4,000 of these are for residential mortgages, and these are rapidly getting more expensive due to rising inflation and interest rates. 

For context, there were around 20,000 mortgage deals available before the housing market shutdown in 2020. It dipped to around 8,000 at its lowest and has never fully recovered, so many homeowners seeking a new mortgage deal are concerned to see products dropping again.

Lenders are currently pulling products at their fastest rate since we went into lockdown in 2020. This resulted in nearly 3,000 products vanishing overnight with many more disappearing in the following days and weeks.

In August 2022, there was an 11.52% drop in offers available[1]. This follows a staggering 17% drop between May- July 2022[2]. 12 of the largest high street banks and lenders have withdrawn new mortgage offers since the announcement of the increased Bank Rate. 

With banks dropping their riskier deals, it means anyone looking for a new mortgage deal may struggle if they’ve got a smaller deposit, as lenders view these as less appealing products if house prices drop. Unfortunately, certain new mortgage offers just don’t make economic sense in times like these. 

Why Have Lenders Reduced Options for a New Mortgage Deal?

We’re in an economic storm right now. Inflation has hit a 4-decade high, there’s a cost of living crisis and interest rates are on the up. We’ve seen 7 rises in interest rates since December 2021 alone. 

The result? Homeowners and first-time buyers desperately looking to lock in a new rate before costs increase even more. 

3 million people in the UK are faced with the challenge of switching mortgage deals in the next year. Many of them are now trying to secure their new mortgage deal to save money further down the line. It’s led to some lenders pulling products to prevent them from being overwhelmed. Ending up on the “best buy” lists can spell disaster for lenders as they struggle to supply the increased demand.  

With the bank rate rise immediately affecting those on variable tariffs, many people are switching mortgage deals in a short space of time to get the best fixed rates. In order to maintain service to their existing customers, lenders are curbing back on attracting new business. 

For example, Barclays released six new mortgage offers and withdrew them again the next day due to exceptional demand. It then raised rates on 20 of its products the following week. 

Lenders are struggling to cope with the increased demand for their products, leading to long delays for customers. Callers are on hold for hours at a time and you can expect to wait at least a few weeks for a callback. 

How the Housing Market Impacts Switching Mortgage Deals

Of course, the housing market is having an impact. We’ve enjoyed a boom in the market in recent years thanks to the stamp duty holiday, low interest rates and lockdown driving many to seek more space. 

As people grow increasingly concerned about their monthly outgoings, we’re starting to see fewer buyers and more people staying where they are. Whereas people were previously willing to stretch themself for a mortgage, they’re now pausing and reviewing the numbers. In many cases, what was affordable a year ago is now out of budget.

As the housing market looks to slow down, banks are becoming warier about the products they offer and the potential risks they pose. Certain deals – whether an entirely new mortgage deal or a remortgage – just don’t make sense in riskier times. 

How to get the Best New Mortgage Deal

Gone are the days of spending your time shopping around for the best deal. Some are only lasting a few days and others even less, as we’ve seen with many High Street Lenders. 

The good news is that many mortgage offers are valid for 6 months, so you can lock in a new rate well in advance of your current deal ending. Some people are even paying costly early repayment charges to exit their current mortgages to secure lower rates for the future. Learn more about paying redemption fees and if they save you money

The best advice right now is to act fast. The longer you leave it, the more chance you have for interest rates to increase. If you see a rate that suits your circumstances, it’s worth grabbing hold of it, obviously this is where a good mortgage broker can help.

Taking the time to check out your credit score is also very worthwhile. The better your credit score, the better your deals generally are. Discover our other top tips to help you get the best new mortgage deal possible. 

At Stuart Brown, we’re here to support you through the mortgage process. We understand the current pressures and strive to find you the best deal for your individual circumstances, whether it’s switching mortgage deals or buying your first home. Contact us today for more information. 


email: advice@sbms-online.co.uk

Telephone 01525 877650 or 01442 252040

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up the repayments on your mortgage.

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