What are the 'best' mortgage products?

With the mortgage market under constant pressure from wider economic conditions, the most suitable product for any consumer is regularly shifting.

Mortgage Introducer sought the views of brokers as to what mortgage products they believe to be the most appropriate given current conditions.

‘Best’ is subjective

Matthew Jackson (pictured), director at Mint Financial Services, said the ‘best’ mortgage product is subjective as not every product will suit every client.

“However, in general, we are still seeing our applications split primarily between longer term fixed rates and variable rates for residential purchase,” he said.

Jackson said the firm uses regional building societies a lot, with a large number of its advisers particularly keen on Newbury Building Society for its discounted rates for purchase and remortgage at present.

“The lender is also hugely flexible with interest-only and allows 20% overpayments per month, which we have seen a large portion of high-net-worth clients requesting,” Jackson said.

Craig Fish, director at Lodestone Mortgages & Protection, said after assessing all clients’ circumstances and providing them with recommendations, he is seeing most opt for two-year fixed rates.

“They feel that rates may rise a little further but that they will fall back by the time they come to reassess their options,” he said.

That said, Fish added that high-net-worth clients are opting for tracker products with full flexibility, and he has also seen an uptake in bridging finance and secured loan inquiries for debt consolidation.

Elliott Culley, director at Switch Mortgage Finance, meanwhile, said until last month, two-year fixed deals looked like the best option as rates were forecast to drop in 2024-25.

However, Culley said this prediction is now very much up in the air, with clients shifting their considerations over to longer term five-year deals.

“Right now, if a client wants stability then a longer term fixed rate deal is the way to go, however if they are willing to take a risk, or have more net disposable income, then a discount variable product could be the better option,” Culley said.

He highlighted that discount variable products do not go up in the same way a tracker product does; they are based on the lender’s Standard Variable Rate (SVR), and most lenders have not upped their SVR to the same percentage point as the Bank of England.

“There are some interesting products outside the normal fixed rates, and clients need to be informed of these options,” Culley said.

Suitability of products

Scott Taylor-Barr, financial adviser at Barnsdale Financial Management, said advice is and always should be tailored to the individual and their own needs and plans; so he believes there is no ‘best product’ that is suitable for all, or even the majority, of clients.

Many factors enter into this, Taylor-Barr said, particularly what the client’s vision of the next few years looks like for them - will they need to move, borrow more against the property, or maybe be able to pay a chunk off. Then, he added, there are external factors, such as loan-to-value (LTV) and affordability.

“Finally, you also have to account for your client’s attitude to risk, not just a consideration for our wealth-advising colleagues, as some people will be far more willing to take the ‘risk’ of a two-year fixed rate or variable rate, whereas others will simply want the surety of a longer period fixed rate ‘just in case’,” Taylor-Barr said.

Jamie Elvin, director at Strive Mortgages, said the most suitable product will depend on the client’s circumstances and attitude towards risk, as well as the available options.

Tracker rates, although they come with a high degree of risk, Elvin said, may offer interest rates that are over 1% lower than equivalent fixed-rate products.

“Some trackers are offered from as little as 0.15% above the base rate; therefore, even if the base rate were to rise by a further 1%, the tracker may still perform similarly or better than fixed rates over the period,” he said.

There is certainly potential in the tracker, but if you prefer certainty, Elvin said it is probably worth considering a fixed-rate option.

What do you believe are the best mortgage products are present for customers? Let us know in the comment section below.