Mortgage shelf-life drops as lenders increase rates

New data from the Moneyfacts UK Mortgage Trends Treasury Report reveals that the average shelf-life of a mortgage has dropped to 15 days, down from 28 days the previous month. The average rates for 2- and 5-year fixed mortgages saw modest month-on-month rises.

According to the report, the average 2-year fixed rate increased to 5.93%, while the 5-year fixed rate rose to 5.50%. These rates are slightly lower compared to December 2023. The gap between the average 2- and 5-year fixed rates is now at its highest since October 2023, standing at 0.43%.

The average Standard Variable Rate (SVR) remained at 8.18%, just shy of the highest recorded rate of 8.19% in November and December 2023. Meanwhile, the average 2-year tracker variable mortgage rate fell to 5.94%.

Product availability has increased, with the total number of mortgage products rising to 6,629, the highest level since February 2008. However, the average shelf-life of these products has decreased to 15 days, the lowest since March.

Rachel Springall, finance expert at Moneyfacts, said: “Borrowers may feel disheartened to see another consecutive month of rises to the average 2- and 5-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 5-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 5-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.”