The UK mortgage market faces a significant contraction in product availability, raising concerns among stakeholders.
- A new report highlights the smallest range of mortgage choices in over a year, with only 6,402 products available.
- The average shelf-life of mortgage deals has decreased notably, adding urgency to decision-making for borrowers.
- There is a minor fluctuation in fixed mortgage rates, with two-year and five-year averages showing slight changes.
- Experts urge borrowers to secure deals promptly amidst ongoing market uncertainty.
The availability of mortgage options in the UK has reached its lowest point in more than a year, with current products standing at 6,402. This reduction marks a significant contraction in mortgage choices, highlighting the volatility and challenges within the market. The decline in choices is stark compared to two years ago when options plummeted to just 3,117 following the mini-Budget announcement in November 2022.
Moreover, the mortgage market is witnessing a decrease in the average shelf-life of a mortgage product, which now stands at 17 days, down from 21 days the previous month. This shift indicates an urgency for borrowers to make quick decisions to secure favourable terms. Rachel Springall from Moneyfacts commented on the volatility, emphasising the need for borrowers to act swiftly.
In terms of interest rates, minor fluctuations have been noted. The average two-year fixed rate saw a marginal dip of 0.01% to 5.39%, while the five-year fixed rate experienced a slight increase to 5.09%. Historically, the two-year fixed rate has remained higher than the five-year rate since October 2022. Additionally, the average two-year tracker variable mortgage rate rose to 5.71%. Meanwhile, the standard variable rate or revert to rate fell to 7.95%.
Rachel Springall highlighted the potential dissatisfaction among borrowers faced with these market conditions. She stressed the importance of securing a new deal promptly to avoid defaulting onto more expensive revert rates. As the market adapts to the shifting landscape, she suggested that longer-term fixed deals might appeal to those seeking stability amid the unpredictability.
Anticipation of further adjustments to the Bank of England’s base rate adds another layer of complexity to decision-making for borrowers. Although there are expectations of a reduced base rate next year, the current environment injects uncertainty into fixed-rate pricing. Springall pointed out that lenders are likely to adjust fixed rates upwards in response to rising swap rates since the Budget, stressing the importance of affordability within the market.
Staying informed and acting swiftly are essential for borrowers navigating the ever-changing mortgage landscape.
