Mortgage shelf-life drops as lenders increase rates: Moneyfacts

The lowest shelf-life average on Moneyfacts records was 12 days in July 2023.

Related topics:  Mortgages
Rozi Jones | Editor, Barcadia Media Limited
10th June 2024
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"Lenders spent the first few weeks of May repricing, in reaction to a volatile swap rate market, but the latter end of the month was more subdued"
- Rachel Springall, finance expert at Moneyfacts

The average shelf-life of a mortgage has dropped to 15 days, down from 28 days last month, according to the latest data from Moneyfacts.

Mortgage rates have continued to rise, however rate rises on overall two and five-year fixed rate deals were more modest compared to the month prior, up by 0.02%, the smallest monthly rises seen this year. In addition, rates remain slightly lower compared to December 2023.

Average two and five-year fixed rates rose between the start of May and the start of June, to 5.93% and 5.50% respectively. The average two-year fixed rate remains 0.43% higher than the five-year equivalent – the largest gap seen since October 2023 (0.50%).

The average standard variable rate (SVR) remains at 8.18%, just shy of the highest recorded (8.19%) during November and December 2023, while the average two-year tracker variable mortgage fell to 5.94%.

Product choice rose once again month-on-month to 6,629 options, its highest level since February 2008 (6,760).

Rachel Springall, finance expert at Moneyfacts, said: “Borrowers may feel disheartened to see another consecutive month of rises to the average two and five-year fixed mortgage rates. However, both rose by a modest 0.02%, the smallest month-on-month rise this year. The incentive to fix for longer remains, with the average five-year fixed rate standing 0.43% lower than its two-year counterpart, and the incentive to remortgage is prevalent, as the average Standard Variable Rate (SVR) stands at 8.18%. Lenders spent the first few weeks of May repricing, in reaction to a volatile swap rate market, but the latter end of the month was more subdued, around the time the Government announced there would be a General Election in July.

“Despite the small uplift in rates, there was another rise in the overall product availability of residential mortgages, standing at its highest point in 16 years. As lenders reviewed their ranges, which included repricing, launches and withdrawals, the moves led to the average shelf-life of a mortgage plummeting to 15 days, down from 28 days at the start of May. Year-on-year the overall availability of mortgages has risen by 1,662 deals, and within that pool of products, there are 156 more at 90% LTV and 124 more at 95% LTV. These rises are good news for borrowers who may be struggling to build a big enough deposit to secure a new deal. On the other end of the spectrum, there are just 98 more deals at 60% LTV, and month-on-month, there was a slight fall of 15 deals.

“Consumers concerned about rising rates would be wise to seek advice from an independent broker to see if they can lock into a deal early, as some will let borrowers do this from three to six months in advance. However, there may well be some borrowers sitting on the fence, hoping the market gets a base rate cut this year, but they could still grab a lower rate deal than if they were to sit on their SVR without fixing, such as with a tracker deal. Those about to come off a five-year fixed mortgage will have to face the reality that rates are much higher now on an equivalent deal, 2.65% in fact, compared to June 2019, so consumers must ensure they can afford the higher repayments.”

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