Product availability volatile in February
The lifespan of mortgage products has dramatically decreased to just 15 days, while lenders have increased fixed rates over the past month, according to market data provider Moneyfacts.
Its latest UK Mortgage Trends Treasury Report data has revealed a significant drop in the average shelf-life of a mortgage product from a six-month high of 28 days at the beginning of February to a six-month low, equalling the shortest shelf-life recorded in September 2023. The lowest ever recorded was 12 days in July 2023.
The Moneyfacts report has also noted a rise in average mortgage rates for both two- and five-year fixed deals, ending a six-month trend of consecutive rate reductions. As of early March, the average rates for two- and five-year fixed mortgages climbed to 5.76% and 5.34%, respectively, indicating a 0.42% higher rate for the two-year compared to the five-year.
The standard variable rate (SVR), or the average ‘revert to’ rate, also saw a marginal increase of 0.01% to 8.18%, approaching the record high of 8.19% set in the final months of 2023.
Moneyfacts: Mortgage shelf-life plummets and lenders hike rates.
— Moneyfacts Press (@MoneyfactsPress) March 12, 2024
The average shelf-life of a mortgage product plummeted to 15 days, with lenders increasing fixed rates.
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Despite these rate hikes, the availability of mortgage products saw an upswing, reaching 6,004 options, the highest since March 2008. Particularly notable was the increase in the availability of deals at the 90% loan-to-value (LTV) tier, which hit its highest point in four years.
“Mortgage product availability was volatile during February as the average shelf life of a deal plummeted to just 15 days, a six-month low,” said Rachel Springall (pictured), finance expert at Moneyfacts.
“Lenders reacted to the change in swap rates, leading to numerous repricing of fixed rate deals, no doubt making it a challenging situation for borrowers and brokers to keep on top of the changes. The rate volatility led to a rise in both the overall average two- and five-year fixed rates, the opposite direction borrowers may well have hoped for after positive rate cuts recorded a month prior.”
Despite the rise in fixed rates, Springall noted that there are still competitive options available, especially for those with smaller deposits, highlighting a significant increase in product choices at the 90% LTV level.
“However, prospective first-time buyers still have affordability challenges to overcome amid volatile house prices and a lack of affordable housing before they even consider that the average rates on a two-year fixed deal at 90% and 95% LTV sit at 5.99%,” she said.
“As fixed mortgage rates rise, borrowers may wish to wait and see whether these rates will come back down in the weeks to come, but they must keep in mind that there is still an incentive to switch away from a standard variable rate.
“All eyes are on the Monetary Policy Committee and their future rate setting, in conjunction with the swap rate market, as to whether mortgage rates will come down this year. Borrowers would be wise to seek advice if they are looking for a new deal, particularly as the shelf life of a product remains so unpredictable.”
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