Mortgage Rates on the Rise: What This Means for Borrowers
As the latest data from the Moneyfacts UK Mortgage Trends Treasury Report reveals, the average shelf-life of a mortgage has dropped to a mere 15 days, down from 28 days the previous month. This decline is accompanied by a modest increase in the average rates for 2- and 5-year fixed mortgages. The average 2-year fixed rate now stands at 5.93%, while the 5-year fixed rate has risen to 5.50%.
Mortgage Rates on the Rise
The gap between the average 2- and 5-year fixed rates has widened to its highest point since October 2023, standing at 0.43%. Meanwhile, the average Standard Variable Rate (SVR) remains at 8.18%, just shy of the highest recorded rate of 8.19% in November and December 2023.
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.
Mortgage Product Availability on the Rise
As Rachel Springall, finance expert at Moneyfacts, notes, borrowers may feel disheartened by the 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%.
Mortgage Rates: A Cause for Concern?
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.
Mortgage Deals on the Rise
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.
Mortgage Repayments: A Growing Concern
As the mortgage market continues to evolve, borrowers must remain vigilant and adapt to the changing landscape. With rates on the rise and product availability increasing, it’s essential to stay informed and seek expert advice to navigate the complex world of mortgages.
