Switching mortgage deals: Why it won’t pay to delay

This is according to financial experts who have found many deals are being whisked away from the market just two-and-a-half weeks after they have been unveiled.

It means borrowers looking for a new deal have a much shorter opportunity to secure their chosen product than they have in years.

And it comes as rates on fixed-term deals have risen for the 10^th consecutive month – a knock-on effect of the recent barrage of Bank of England rate hikes.

Last week the city regulator, the Financial Conduct Authority (FCA), warned borrowers who were eligible should ‘switch if they can’ to save money.

It estimated 110,000 would save between £500 to £1,000 a year for two years by switching and 150,000 would save over £1,000 a year over the same period.

Another 110,000 borrowers would save less than £500 a year for two years by switching deals, it said.

But Eleanor Williams, finance expert at Moneyfacts, said anyone following this advice may wish to ‘move swiftly’ to achieve this.

“Mortgage availability has dropped again this month,” she said, “admittedly reducing at a less dramatic rate than recorded last month.

“August began with sight of 4,407 mortgages on offer, which is 149 fewer than were available at the start of July, meaning that the level of choice for borrowers has fallen again. Not only are there now fewer deals for borrowers to choose from, but the average shelf life for mortgage deals has plummeted to a new low of just 17 days this month.

“This reflects the speed at which providers are updating their offerings, but also means that those looking for a new mortgage have the shortest length of time we have ever recorded to try to secure their deal of choice.”

Are mortgage rates getting more expensive?

In the meantime, and following the Bank of England’s latest 0.5% hike in the base rate, lenders are increasing the rates on their fixed-rate and variables mortgages too, according to Moneyfacts.co.uk.

Full details are in the table below but the currently-popular five-year fixed mortgage now has an average rate of 4.08% – the first time it has surpassed 4% since October 2014.

Following a monthly rise of 0.19%, this rate is now 1.44% above the equivalent rate recorded in December 2021 (2.64%) said Moneyfacts.

The average overall two-year fixed rate is now 3.95%, following a 0.21% increase in the last month and the average Standard Variable Rate (SVR) has risen by 0.11% month-on-month to sit at 5.17%. This is the highest on Moneyfacts’ records since December 2008 (5.68%)

Eleanor added: “The amount a borrower might be able to save on a new mortgage will depend on many factors, and it’s important consumers remember that average rates reflect what’s available across the whole of the market, and therefore there are still products offering even more competitive rates and packages on offer.

“The support and advice of a broker in finding the best option for an individual’s circumstance and in helping to assess their eligibility has likely never been more vital as the mortgage landscape remains extremely changeable.”