Average shelf-life of a product falls significantly
Fixed mortgage rates saw their largest month-on-month reductions in nearly six months, with the gap between the average two- and five-year fixes now at its narrowest margin in more than two years, according to the latest Moneyfacts UK Mortgage Trends Treasury Report.
The average two-year fixed mortgage rate dropped by 0.13 percentage points to 5.39%, while the average five-year fixed rate declined by 0.10 percentage points to 5.22%. These reductions mark the biggest cuts since October 2024, when rates fell by 0.16 and 0.13 percentage points, respectively.
At the start of March 2024, the average five-year fixed rate was 5.34%, meaning it has decreased by 0.12 percentage points over the year. The two-year fixed rate saw a more significant decline, dropping 0.37 percentage points from 5.76% in the same period.
The gap between the average two- and five-year fixed rates is now 0.17 percentage points — the narrowest margin since January 2023, when it stood at 0.16 percentage points. The two-year fixed rate has remained higher than the five-year equivalent since October 2022.
Meanwhile, the average shelf-life of a mortgage product fell to 16 days, from 36 days a month ago.
In terms of mortgage product availability, the total number of options rose to 6,684, marking an increase from 6,004 a year ago and reaching the highest level since February 2008, when 6,760 products were available.
Variable rates also saw declines. The average two-year tracker mortgage rate fell to 5.18%, while the average standard variable rate (SVR) dropped to 7.68%. The SVR had previously reached a peak of 8.19% in November and December 2023.
Mortgage rates in the UK are continuing to decline as lenders adjust pricing in response to falling swap rates and last month’s Bank of England base rate cut. The shift has sparked optimism for improved affordability, with mortgage providers, including major lenders Halifax and HSBC UK, announcing rate reductions last week.
“The rate cutting momentum was prevalent during February, with the average two- and five-year fixed rates seeing their biggest cuts in almost six months,” said Rachel Springall (pictured), finance expert at Moneyfacts. “Such fierce competition in the aftermath of a typically subdued time of year showed a mix of moves, but it led to the average shelf-life of a mortgage plummeting to 16 days at the start of March, down from 36 days at the start of February.”
“Borrowers who have little equity or indeed a small deposit may be pleased to see rates have dropped lower, with the average two-year fixed rate at 95% loan-to-value seeing its biggest month-on-month cut in six months. It’s positive to see the rate drop further below 6% for those who may need to opt for a short-term fixed mortgage due to their circumstances.”
As lenders gradually pass on Bank of England base rate reductions, SVR rates have started to decline. However, Springall advised borrowers to explore their options carefully.
“The incentive to remortgage from an SVR remains, and it’s wise to use a broker to find the most suitable choice before falling onto such a rate,” she said. “Borrowers must make sure to look beyond the headline-grabbing low fixed rates on the market and pick a deal that provides the best cost-saving package.”
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