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Mortgage shelf life reaches record low as rates continue to rise

  • 08/08/2022
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Mortgage products now have an average shelf life of 17 days, down from the record low of 21 days set in June this year.

According to Moneyfacts, total products on the market also continued to fall, going from 4,556 in July this year to 4,407 in August. It is also down from 4,660 in August last year.

The report also found that pricing has increased for both two and five-year fixed rates for the tenth consecutive month, with five-year fixed rates surpassing four per cent for the first time since 2014.

The average five-year fixed rate is 4.08 per cent, up 0.19 per cent on the prior month and a 1.44 per cent increase on December last year.

The average two-year fixed rate is 3.95 per cent, which is 0.21 per cent higher than July and is a 1.61 per cent rise on December last year.

Moneyfacts said that this is the highest average two-year fixed rate it has recorded for over nine years.

The average Standard Variable Rate (SVR) has increased 0.11 per cent month-on-month to 5.17 per cent, which is the highest recorded since 2008 and marks eight months of consecutive increases.

Eleanor Williams, finance expert at Moneyfacts, said that borrowers would have to move swiftly to secure a “cost-effective deal”, pointing to a statement from the Financial Conduct Authority (FCA) last week urging borrowers to consider their options and switch, if possible, to save money.

She continued that mortgage availability had fallen again, but it was at a “less dramatic rate” than the month before.

Williams added that there were not only fewer deals to choose from but also a shorter average shelf life, showing how fast lenders were updating their offerings.

“This 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,” she said.

Williams said that rates for two and five-year fixed rates and SVR had climbed, with the differential between fixed rates and the SVR shrinking. However, she said those on or about to revert to the SVR could still save more if they opted for a fixed rate.

“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,” she explained.

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