Buyers face race for rates as mortgage products last ...

Forget the ‘race for space,’ buyers are now facing a race for mortgage rates.

Comparison website Moneyfacts has revealed that the average shelf life of a mortgage has fallen to 15 days, the joint lowest on record.

It comes as Moneyfacts data showed two and five-year fixed mortgage rates fell for a second consecutive month and product choice was much more stable than seen in recent months.

Product choice has improved since October 2022, up from 2,258 options to 3,643, Moneyfacts said.

Month-on-month, product numbers were much more stable, falling by just 87 deals, the smallest shift recorded since April 2022.

Moneyfacts said this may suggest stability has returned to the market but highlighted that buyers have to move fast as rates are only sticking around for 15 days on average.

Both the average two- and five-year fixed rates fell for the second month running during January, down to 5.79% and 5.63% respectively, following 13 consecutive months of rises recorded up to November 2022, according to Moneyfacts.

Rachel Springall, finance expert at Moneyfacts, said: “Product choice within the mortgage market has improved in recent months, and the latest figures show volumes are at a much more stable level, however, the volatility with lenders adjusting such deals remains as the average shelf life of a mortgage product fell to 15 days, the joint lowest on Moneyfacts records.

“This activity has led overall fixed rates to fall and indicates the focus of lenders’ repricing strategies.

“Borrowers concerned over interest rates may well be relieved to see both the average two and five-year fixed mortgage rates fell month-on-month, down by 0.22% and 0.17% respectively.”

Springall cautioned that both these average rates stand higher compared with a year ago.

She added: “Average rates at higher loan-to-value brackets are also falling, but more improvement would be welcomed for those with a limited deposit, considering the average two-year fixed rate mortgage at 95% loan-to-value sits above 6%.”

“The cost of living crisis and inflated interest rates over recent months may well impact borrowers’ intentions of getting a new deal. However, it is anticipated that fixed interest rates will fall further in the months to come to entice new business.”

Mortgage market analysis
		Jan-21	Jan-22	Oct-22	Dec-22	Jan-23
Fixed and variable rate products	Total product count - all LTVs	2,893	5,394	2,258	3,730	3,643
	Product count - 95% LTV	8	347	132	144	132
	Product count - 90% LTV	160	725	295	457	435
	Product count - 60% LTV	452	604	337	500	484
All products	Shelf life (days)	28	28	15	17	15
All LTVs	Average two-year fixed rate	2.52%	2.38%	5.43%	6.01%	5.79%
All LTVs	Average five-year fixed rate	2.71%	2.66%	5.23%	5.80%	5.63%
95% LTV	Average two-year fixed rate	4.44%	3.06%	5.54%	6.26%	6.13%
95% LTV	Average five-year fixed rate	3.62%	3.33%	5.49%	5.95%	5.82%
90% LTV	Average two-year fixed rate	3.65%	2.55%	5.33%	6.07%	5.89%
90% LTV	Average five-year fixed rate	3.79%	2.93%	5.12%	5.76%	5.59%
60% LTV	Average two-year fixed rate	1.74%	1.73%	5.08%	5.73%	5.39%
60% LTV	Average five-year fixed rate	1.98%	1.98%	4.94%	5.55%	5.33%
All LTVs	Standard Variable Rate (SVR)	4.41%	4.41%	5.63%	6.40%	6.64%
All LTVs	Average two-year tracker rate	2.37%	1.75%	3.77%	4.03%	4.48%
Data shown is as at the first available day of the month, unless stated otherwise.
Source: Moneyfacts Treasury Reports