
New analysis by Moneyfacts has shown that the average ‘shelf-life’ of a mortgage has nearly halved in a month.
At the start of May the average mortgage spent 28 days on the market, by the start of June the average had fallen to just 15 days. While deals are typically spending less time on the market, the number of products available has hit the highest level in more than 16 years.
The data shows that there were 6,629 deals available at the start of June, the highest figure since the 6,760 recorded in February 2008. The report also shows that the overall average two and five-year fixed mortgage rates rose between the start of May and the start of June, to 5.93% and 5.50%, respectively.
Rachel Springall, Finance Expert at Moneyfacts, said “Borrowers may feel disheartened to see another consecutive month of rises to the average two- and five-year fixed mortgage rates. However, both rose by a modest 0.02%, the smallest month-on-month rise this year. The incentive to fix for longer remains, with the average five-year fixed rate standing 0.43% lower than its two-year counterpart, and the incentive to remortgage is prevalent, as the average Standard Variable Rate (SVR) stands at 8.18%. Lenders spent the first few weeks of May repricing, in reaction to a volatile swap rate market, but the latter end of the month was more subdued, around the time the Government announced there would be a General Election in July.
“Despite the small uplift in rates, there was another rise in the overall product availability of residential mortgages, standing at its highest point in 16 years. As lenders reviewed their ranges, which included repricing, launches and withdrawals, the moves led to the average shelf-life of a mortgage plummeting to 15 days, down from 28 days at the start of May. Year-on-year the overall availability of mortgages has risen by 1,662 deals, and within that pool of products, there are 156 more at 90% loan-to-value (LTV) and 124 more at 95% LTV. These rises are good news for borrowers who may be struggling to build a big enough deposit to secure a new deal. On the other end of the spectrum, there are just 98 more deals at 60% LTV, and month-on-month, there was a slight fall of 15 deals.
“Consumers concerned about rising rates would be wise to seek advice from an independent broker to see if they can lock into a deal early, as some will let borrowers do this from three to six months in advance. However, there may well be some borrowers sitting on the fence, hoping the market gets a base rate cut this year, but they could still grab a lower rate deal than if they were to sit on their SVR without fixing, such as with a tracker deal. Those about to come off a five-year fixed mortgage will have to face the reality that rates are much higher now on an equivalent deal, 2.65% in fact, compared to June 2019, so consumers must ensure they can afford the higher repayments.”