Mortgage Rates Drop, But Deals Are Disappearing Fast
The UK mortgage market has seen a significant shift in recent weeks, with the average shelf-life of a mortgage deal falling to just 17 days in July. This is down from 30 days in June, according to data from Moneyfacts. Meanwhile, the average two- and five-year fixed mortgage rates have fallen, halting five months of consecutive rises and giving a boost to homebuyers.
Image: Mortgage rates
The drop in mortgage rates is a welcome relief for homebuyers, who have been facing rising costs in recent months. However, the falling shelf-life of mortgage deals is a cause for concern, as it means that borrowers have less time to secure a deal before it is withdrawn from the market.
“Borrowers will be pleased to see that fixed mortgage rates fell month-on-month, halting five consecutive months of rises,” said Rachel Springall, finance expert at Moneyfacts. “Lenders re-priced their deals with vigour during July due to falling swap rates, and the volatility within the mortgage market was made clear by the notable drop in the average shelf-life of a mortgage to just 17 days, down from 30 in June.”
Image: Mortgage market
The mortgage market is highly competitive, with lenders constantly reviewing and updating their deals. This means that borrowers need to be quick to secure a deal before it is withdrawn from the market. “There are expectations for rates to fall further in the weeks to come, particularly as the market reflects on the 0.25% base rate cut, the first cut in over four years,” said Springall.
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The base rate cut is expected to have a positive impact on the mortgage market, with lenders likely to pass on the savings to borrowers. However, borrowers need to be aware that the overall true cost of a mortgage is not just about the interest rate, but also about the fees and charges associated with the deal.
“A variety of lenders priced their lowest rate deals even lower still over the past few weeks, leading to the return of sub-4% fixed rates towards the end of July, but borrowers must look beyond the initial rate and assess any mortgage based on the overall true cost,” said Springall.
Image: Mortgage deals
In conclusion, the drop in mortgage rates is a welcome relief for homebuyers, but the falling shelf-life of mortgage deals is a cause for concern. Borrowers need to be quick to secure a deal before it is withdrawn from the market, and they need to be aware of the overall true cost of a mortgage, including fees and charges.
“Borrowers will be pleased to see that fixed mortgage rates fell month-on-month, halting five consecutive months of rises.” - Rachel Springall, finance expert at Moneyfacts
