First Time Buyer
Mortgage borrowers urged to ‘move swiftly’ to secure a deal
Mortgage products now have an average shelf life of 17 days, down from the previous record low of 21 days set in June this year.
According to Moneyfacts, total products on the market also continued to fall, going from 4,556 in July this year to 4,407 in August. It is also down from 4,660 in August last year.
The data site also revealed that pricing has increased for both two and five-year fixed rates for the tenth consecutive month, with five-year fixed rates surpassing 4% for the first time since 2014.
It comes after the Bank of England last week raised the base rate for the sixth consecutive time to 1.75%, up from the historic low of 0.1% in December 2021.
The average five-year fixed rate is 4.08%, up 0.19% on the prior month and a 1.44% increase on December last year.
Meanwhile, the average two-year fixed rate is 3.95%, which is 0.21% higher than July and is a 1.61% rise on December last year.
Moneyfacts said this is the highest average two-year fixed rate it has recorded for over nine years.
The average Standard Variable Rate (SVR) has increased 0.11% month-on-month to 5.17%, which is the highest recorded since 2008. It also marks eight months of consecutive increases.
Eleanor Williams, finance expert at Moneyfacts, said that borrowers would have to move swiftly to secure a “cost-effective deal”, pointing to a statement from the regulator, the Financial Conduct Authority (FCA) last week urging borrowers to consider their options and switch, if possible, to save money.
She said that mortgage availability had fallen again, but it was at a “less dramatic rate” than the month before.
Williams added that there were not only fewer deals to choose from but also a shorter average shelf life, showing how fast lenders were updating their offerings.
“This means that those looking for a new mortgage have the shortest length of time we have ever recorded to try to secure their deal of choice,” she said.
Williams said that rates for two and five-year fixed deals and SVR had climbed, with the differential between fixed rates and the SVR shrinking. However, she said those on or about to revert to the SVR could still save more if they opted for a fixed rate.
“The amount a borrower might be able to save on a new mortgage will depend on many factors, and it’s important consumers remember that average rates reflect what’s available across the whole of the market, and therefore there are still products offering even more competitive rates and packages on offer.
“The support and advice of a broker in finding the best option for an individual’s circumstance and in helping to assess their eligibility has likely never been more vital as the mortgage landscape remains extremely changeable,” she explained.