Mortgage Warning: Expert Issues Caution to Homeowners

A finance expert has issued a warning to anyone looking to get a mortgage this year. The warning comes as the average shelf life of a mortgage has nearly halved in just one month, according to Moneyfacts.

Average shelf life of a mortgage plummets

The average shelf life of a mortgage has dropped to just 15 days, a sharp decrease from the 28-day average at the start of May. This June figure represents the shortest average time period recorded by Moneyfacts since March, with the record low being 12 days in July 2023.

Mortgage Products Reach 16-Year High

Despite the reduced time that mortgages are now available, the choice for homeowners has increased to levels not seen in over 16 years. There were 6,629 mortgage products counted at the start of June, the most since February 2008 when 6,760 deals were on offer.

Mortgage products reach 16-year high

Finance expert Rachel Springall from Moneyfacts commented, “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.”

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.

Mortgage Rates on the Rise

The average two-year homeowner mortgage rate on the market on Monday is 5.96%, having edged up from 5.95% on Friday last week. The last time the average two-year fix was at 6% or above was on December 7, when the figure was 6.01%. Average two-year fixes were as high as 6.85% in early August last year.

Mortgage rates on the rise

Ms. Springall continued, “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 (standard variable rate) without fixing, such as with a tracker deal.”