Mortgage Rates Continue to Climb as Lenders Reprice

The UK mortgage market has seen a significant shift in recent weeks, with the average shelf-life of a mortgage dropping to just 15 days. According to data from the Moneyfacts UK Mortgage Trends Treasury Report, this decline is coupled with a moderate increase in average mortgage rates on two- and five-year fixed rate deals.

Mortgage rates continue to rise

The overall average two- and five-year fixed rates rose between the start of May and the start of June, reaching 5.93% and 5.50% respectively. This marks the smallest monthly rise this year, but still, borrowers may feel disheartened by the continued upwards trend.

“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.” - Rachel Springall, Moneyfacts finance expert

Lenders’ Reaction to Market Volatility

Lenders spent the first few weeks of May repricing in reaction to a volatile swap rate market. However, the latter end of the month was more subdued, around the time the Government announced there would be a General Election in July.

General Election announcement

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. This increase in product choice is good news for borrowers who may be struggling to build a big enough deposit to secure a new deal.

“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.” - Rachel Springall, Moneyfacts finance expert

Mortgage options on the rise

The average two-year tracker variable mortgage fell to 5.94%, while the average ‘revert to’ rate or Standard Variable Rate (SVR) remained at 8.18%, just shy of the highest recorded during November and December 2023.

What This Means for Borrowers

As lenders continue to reprice and borrowers face increasingly challenging mortgage market conditions, it’s essential to stay informed and up-to-date with the latest trends and developments. With the incentive to fix for longer remaining strong, and the average five-year fixed rate standing 0.43% lower than its two-year counterpart, borrowers must carefully consider their mortgage options and plan for the future.

Planning for the future