According to its mortgage market data for the month, the share of demand for a two-year fix was up significantly compared to last year, when searches accounted for 22.4 per cent of activity.
Searches for three to five-year fixed products made up a third of all fixed product searches compared to 41.5 per cent a year ago, while five to 10-year fixed searches made up 24 per cent of activity, down from 36 per cent last year.
Nathan Reilly, director at Twenty7tec, said: “The move in fixed mortgages has definitely swung back towards the two-year products which now account for the same proportion of the market as they did two years ago. It will be interesting to see whether this theme continues.
“It seems customers are favouring some level of certainty rather than trying to predict the market and roll the dice on the long-term future of base rate.”
Across all mortgage options, fixed, tracker and stepped product searches were higher than typical for May but searches for Sonia, variable, capped and discount rate mortgages were 10 per cent down on long-term averages.
Busy month for self-employed
May recorded the second-ever busiest month for self-employed mortgage searches and accounted for the highest share of searches during the period.
Twenty7Tec’s data showed that searches for this group were above the 80th percentile for most of the month.
Reilly said: “Mid-May saw a peak in self-employed mortgage searches outpacing even January’s high point.”
Searches for purchase mortgage rose by 7.9 per cent compared to the month before while remortgage searches went up by 11.1 per cent. Purchase enquiries made up 53 per cent of activity.
Buy-to-let mortgage searches rose by 7.7 per cent month-on-month, while searches for first-time buyer products increased by the same amount. First-time buyers made up 18 per cent of activity on the platform.
Activity suppressed by bank holidays
The bank holidays during May had a larger impact on the number of ESIS documents produced for buy-to-let borrowers than it did for residential, and the firm said this “depressed” activity during the month overall.
The 8.3 per cent drop in the number of products available meant more activity was being driven through fewer channels.
Reilly said: “May 2023 was characterised by its strong performance despite its unusual tally of three bank holidays. Some of the drop in activity that we experienced in April was recovered, but we’re expecting a bank-holiday-free, pre-summer holiday June 2023 to see activity rise even further. Although it will be interesting to see if this front-end activity translates through to applications after last week’s economic update and the impacts this has had on interest rates.
“The rate decision by the Bank of England will almost certainly mean that we’ll see a rise in mortgage searches just before and just after June 22nd.
“Whilst product numbers are largely down due to last week’s inflation update and lenders taking stock, the market is still in a far better position than post-mini Budget as availability remains broadly consistent across all areas.”
