Discounted Mortgages Out Of Favour As Lenders Focus on Fixed Rate Products

The number of discounted mortgages offered by mortgage lenders has fallen by 72%, whereas fixed rate and tracker mortgages are increasing in popularity.

There are now 72% fewer discounted mortgage products available than there were three years ago, research by Defacto, an independent financial research firm, has found.

In contrast, the number of fixed rate and tracker mortgage products has increased by 33% and 36% respectively over that time.

With the Bank of England base rate remaining at 0.5%, standard variable rate (SVR) mortgages are also at low levels and as a discounted mortgage is based on the SVR, lenders are finding their margins being squeezed to unacceptable levels, and have been withdrawing these products from the market, as a result.

Mortgage lenders can makelarger margins on their fixed rate and tracker mortgages and are therefore keen to promote these products. Borrowers are also keen to lock in low rates by securing a fixed rate or tracker mortgage, as many are concerned that interest rates may start to rise over the coming months.