Number of product options doubles since October
The number of mortgage options for borrowers has risen to its highest level since February 2022 as the mortgage market starts to stabilise, according to data provider Moneyfacts.
Its UK Mortgage Trends Treasury Report data has revealed that product choice rose month-on-month to 5,338 options – the highest count since the 5,356 recorded in February last year and more than double the availability seen in October 2022.
Both the average two- and five-year fixed rates fell between the start of August and the start of September, to 6.70% and 6.19% respectively.
The average two-year tracker variable mortgage rate rose month-on-month to stand at 6.25%, while the average ‘revert to’ rate or standard variable rate (SVR) continued to climb, hitting a record 8.09%.
Options within the 85% loan-to-value (LTV) tier are at their highest levels on Moneyfacts’ records, suggesting more stability in choice across the market.
The average shelf life of a mortgage product rose to 15 days from the record low of 12 days in July 2023.
“Mortgage product choice has grown to its highest level since February 2022 and average rates are gradually falling,” said Rachel Springall, finance expert at Moneyfacts. “This positive momentum has resulted in the average shelf life of a mortgage product rising to 15 days, up from a record low of 12 days in July.
“It was a busy summer for lenders, as they moved to cut fixed rates and launch new deals to entice borrowers. A notable area of growth in the LTV spectrum was for borrowers who have a 15% deposit or level of equity (85% LTV), as choice in this sector rose by 74 deals, to stand at an all-time high on Moneyfacts’ records, standing at 868 products.”
Springall added that borrowers who were about to come off a fixed rate deal or who were sitting on their revert rate might now wish to explore their options to refinance, particularly as the average SVR stood at a record high of 8.09%.
“As average fixed rates start to fall and the average SVR rises, the incentive to lock into a fixed rate deal increases,” she pointed out. “As average fixed rates remain at levels not seen since the years following the 2007 financial crisis, borrowers may wish to consider other options, such as tracker mortgages, so seeking advice to navigate deals is essential.
Springall said it would be interesting to see how the mortgage market improved in the weeks to come, particularly if swap rates fell, as lenders may then cut their fixed rate deals as a result.
“As we have seen before, a volatile interest rate market can have a significant impact on lenders’ pricing strategies,” she noted. “Borrowers concerned about the affordability of their mortgage will be keen to see stability in product choice and for fixed rates to fall further before they refinance.
“There are some attractive deals out there with incentive packages to choose from, which may be a more cost-effective choice than a low-rate fixed deal.”
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