Borrowers who wish to fix their mortgage rate will find average prices have increased in the last month, the latest data from Moneyfacts.co.uk has revealed.
The length of time for which products are available on the market has also plummeted, illustrating the volatility in the current mortgage market at the present time.
The data comes just a day after four mortgage lenders – including three of the ‘big six’ – made hikes to their mortgage rates.
And this came after several other lenders began raising their rates at the end of February, a move made in response to rising SWAP rates, which are used by mortgage providers to set pricing.
Now Moneyfacts.co.uk has confirmed this spate of rate hikes has meant average mortgage rates for both two- and five-year fixed deals have gone up – bucking the trend for consecutive price falls.
The average two-year fixed rate has increased from 5.56% in February to 5.76% in March. Meanwhile, a typical five-year fix has risen from 5.18% in February to 5.34% this month.
Standard Variable Rates (SVRs), which are the rates onto which borrowers revert when their deal ends and they don’t switch to a new mortgage, have also gone up a notch by 0.01% on average. A typical SVR is currently 8.18%, just shy of the highest recorded of 8.19% during November and December 2023.
The average two-year tracker variable mortgage remained at 6.15%, said Moneyfacts.
There is some good news, however, as product choice remains strong with 6,004 mortgage options – this is the highest level since March 2008. Those looking for 90% loan-to-value (LTV) deals – borrowers with a 10% deposit or equity – will benefit from the greatest choice in four years.
But, Moneyfacts said, the average shelf-life of a mortgage product plummeted to 15 days, a six-month low down from 28 days at the start of February 2024.
‘Shelf life’ refers to the length of time mortgages are available before they are pulled from the market. The lowest shelf-life average on Moneyfacts records was 12 days in July 2023.
Rachel Springall, finance expert at Moneyfacts, explained more about what has been happening.
“Mortgage product availability was volatile during February as the average shelf life of a deal plummeted to just 15 days, a six-month low,” she said.
“Lenders reacted to the change in SWAP rates, leading to numerous repricing of fixed rate deals, no doubt making it a challenging situation for borrowers and brokers to keep on top of the changes.
“The rate volatility led to a rise in both the overall average two- and five-year fixed rates, the opposite direction borrowers may well have hoped for after positive rate cuts recorded a month prior.
“However, it is worth noting that fixed rates remain lower than at the start of 2024 and there are still some decent options available for borrowers to compare.”
If you are looking for a mortgage at the moment but concerned about availability of deals and price hikes, speak to a broker.
Springall added: “As fixed mortgage rates rise, borrowers may wish to wait and see whether these rates will come back down in the weeks to come, but they must keep in mind that there is still an incentive to switch away from a Standard Variable Rate (SVR).
“All eyes are on the [Bank of England’s] Monetary Policy Committee and their future rate setting, in conjunction with the swap rate market, as to whether mortgage rates will come down this year.
“Borrowers would be wise to seek advice if they are looking for a new deal, particularly as the shelf life of a product remains so unpredictable.
