Consumer choice on home loans continues to contract
Halifax said it would no longer offer trackers from the close of business yesterday. Photo: Matt Cardy/Getty Images
THERE has been a 34pc drop in the past year in the number of mortgage products on offer as the credit crunch forces lenders to pull back on housing loans.
The figures emerged as British owned Halifax said it was withdrawing tracker mortgages from the Irish market. In the past few days, National Irish Bank, AIB and Bank of Ireland have stopped offering trackers.
Figures compiled by Frank Conway of Irish Mortgage Corporation show that there were 331 different mortgage products on offer this time last year. This has now fallen back to 218, a decrease of 34pc, he said.
Tracker
"The pullback on tracker mortgages is having a significant impact on the choice of mortgages available. This is also likely to have a significant negative impact on borrowing as lenders are likely to use standard variable rates as a significant tool to control their own costs," Mr Conway added.
Halifax said it would no longer offer trackers from the close of business yesterday. This is a major blow to the market as it offered the best value tracker following the withdrawal of NIB's tracker on Monday.
Bank of Scotland (Ireland) which offers home loans through brokers, said it was reviewing its tracker offerings.
Leeds Building Society has tightened lending criteria for its trackers, and increased the margin on them from 1.75pc over the ECB rate to 2.2pc.
Trackers have proved hugely popular over the past five years. As many as three-quarters of a million home owners have existing tracker rates, with some as low as 0.50pc over the ECB rate.
Two years ago, NIB launched a Loan To Value (LTV) tracker mortgage set at ECB plus 0.5pc. Some of the bank's customers will be paying just 4.25pc when tomorrow's ECB rate cut takes effect. This compares with three-year fixed rates as high as 6.10pc from other lenders.
Banks and building societies have been withdrawing trackers for months and trying to persuade new customers, and those coming out of fixed rates, to take up standard variable rates instead.
- Charlie Weston Personal Finance Editor
