Two- and five-year fixed rates rise for fifth consecutive month
The availability of 95% loan-to-value (LTV) mortgage deals has reached its highest level in over two years, according to the product data provider Moneyfacts.
The number of 95% LTV deals increased to 361, the highest since May 2022, when 369 deals were available. Overall product choice rose to 6,658 options, the highest since February 2008, which had 6,760 options.
The average shelf-life of a mortgage product doubled to 30 days from 15 days the previous month. The lowest shelf-life recorded was 13 days in July 2023.
Moneyfacts’ latest UK Mortgage Trends Treasury Report has also revealed a fifth consecutive month of rate increases for two- and five-year fixed mortgage rates.
The average two-year fixed mortgage rate increased by 0.02%, and the five-year fixed rate increased by 0.03%.
Between the start of June and the start of July, the average two-year fixed rate rose to 5.95%, and the five-year fixed rate to 5.53%. The average two-year fixed rate is 0.42% higher than the five-year equivalent, while the average two-year tracker variable mortgage rate remained steady at 5.94%. The standard variable rate (SVR) fell slightly to 8.17%, just below the record high of 8.19% in late 2023.
“Borrowers who have a limited deposit may be pleased to see a rise in the number of mortgages available at 95% loan-to-value this month, reaching a two-year high,” said Rachel Springall (pictured), finance expert at Moneyfacts. “There are now 361 options available, the highest count since May 2022, when there were 369 deals.
“There is lots of room for growth in this area of the market, as it currently represents just 5% of all deals available to borrowers across fixed and variable mortgages. Overall product availability continued to rise, spreading a positive sentiment on mortgage choice for another consecutive month, its highest point in 16 years.”
Springall said that while the rise in the overall average two- and five-year fixed mortgage rates may come as disappointing news to borrowers, one positive aspect to take away from activity during June is that the rises were modest.
“One notable difference month-on-month has been a return to the stability in the shelf life of a mortgage deal, which has doubled to 30 days, up from 15 days,” she added. “Lenders have been repricing their deals in response to volatile swap rates, which calmed during June. If swap rates reach a turning point to drop, then there will be an expectation for fixed mortgage rates to come down, but this may be a slow and steady process to have a huge impact on overall average rates.
“The concerns surrounding mortgage affordability among borrowers remains and the government will no doubt be under the spotlight to see what plans may be set in motion to support homebuyers and those looking to get onto the property ladder. Those borrowers coming off a fixed rate deal this year will note the average standard variable rate is above 8%, so considering a lower rate fixed or tracker mortgage would be wise.
“There are over 400 different tracker mortgages on the market, and any that track the Bank of England base rate may suit those who believe that base rate will come down before the year is over. It is essential that any borrowers who are struggling seek advice from their lender and an independent broker to navigate the latest deals available to them.”
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