What's driving these changes in the market?
Mortgage product availability rebounded in October following two consecutive months of decline, according to the latest Moneyfacts UK Mortgage Trends Treasury Report.
The total number of mortgage products available rose to 6,645 from 6,523 in the previous month. Excluding July and August 2024, this month has the highest count since February 2008, when 6,760 products were available. Product availability has also surged over the past two years, with nearly three times as many options compared to October 2022, when there were 2,258 products.
The average shelf-life of a mortgage product remained steady at 21 days, unchanged from the previous month.
In terms of pricing, the average two-year fixed mortgage rate dropped by 0.16% month-on-month to 5.40%, while the average five-year fixed rate fell by 0.13% to 5.07%. Both rates are now at their lowest levels since May 2023. The gap between the two-year and five-year fixed rates continues, with the two-year rate 0.33% higher than its five-year counterpart, a trend that has persisted since October 2022.
Variable mortgage rates also saw slight declines. The average two-year tracker mortgage rate fell to 5.67%, and the standard variable rate (SVR) dropped to 7.96%, down from its peak of 8.19% in late 2023.
Rachel Springall (pictured), finance expert at Moneyfacts, said the rise in mortgage product choice was a positive sign for the market, particularly after two months of declines.
“Lenders continued to cut fixed mortgage rates, but there was a much calmer rotation of products,” she noted. “These moves show the promising attitude of lenders to draw in new customers, which may be even more pressing as we edge closer to any of their end-of-year targets.”
Springall added that falling swap rates encouraged lenders to reduce rates, but warned that the upcoming UK Budget and inflation concerns could create uncertainty in market pricing.
“All eyes will be on the pending Budget and the next base rate decision day for borrowers,” she said. “In the meantime, it would be wise for them to seek independent advice to explore the latest options.
“Lenders will no doubt be watching the markets closely, so they may react to changes suddenly. As a result, as we have seen in the past, some deals could be pulled as lenders try to assess their current margins.”
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
