As a local estate agent in Earlsfield, London, it's important for us to stay informed about the latest trends in the mortgage market. Recently, data from the Moneyfacts UK Mortgage Trends Treasury Report has shown a decline in the average shelf life of a mortgage to just 15 days, which is the joint lowest on record. Additionally, both the overall two and five-year fixed mortgage rates have fallen for a second consecutive month and product choice has become much more stable compared to recent months.
Since October 2022, product choice has improved significantly, increasing from 2,258 options to 3,643. Month-on-month, product numbers have remained relatively stable, with only a decrease of 87 deals, the smallest shift recorded since April 2022. This suggests that the market may be returning to a more stable state. However, the average shelf life of a mortgage product has decreased to 15 days, the joint lowest on record. The average two and five-year fixed rates have also fallen for a second month in a row, down to 5.79% and 5.63% respectively. This follows a trend of 13 consecutive months of increases up to November 2022. At 5.79%, the average two-year fixed rate has dropped by 0.22%, falling below 6.00% for the first time since October 2022.Furthermore, following another Bank of England base rate rise in December 2022, the average "revert to" rate or Standard Variable Rate (SVR) has continued to climb. At 6.64%, this rate is now the highest on record since November 2008 (6.77%). The gap between the average two-year fixed rate mortgage from two years ago (2.52%) and the current average SVR continues to widen, with a difference of 4.12%.
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. However, it is clear that both these average rates stand higher compared to a year ago, with notable rises during the tail end of 2022 during a time of unprecedented uncertainty surrounding interest rates. 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 6.00%. The consecutive Bank of England base rate rises have fuelled a rise to the average SVR, which has now reached 6.64%, the highest on Moneyfacts records since November 2008 (6.77%), making it imperative for borrowers to check their rate and consider remortgaging.
“As existing mortgage holders weigh up their refinancing plans and others debate their home purchase desires in 2023, it is imperative they seek independent financial advice to go through the options available to them. 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.”
Since October 2022, product choice has improved significantly, increasing from 2,258 options to 3,643. Month-on-month, product numbers have remained relatively stable, with only a decrease of 87 deals, the smallest shift recorded since April 2022. This suggests that the market may be returning to a more stable state. However, the average shelf life of a mortgage product has decreased to 15 days, the joint lowest on record. The average two and five-year fixed rates have also fallen for a second month in a row, down to 5.79% and 5.63% respectively. This follows a trend of 13 consecutive months of increases up to November 2022. At 5.79%, the average two-year fixed rate has dropped by 0.22%, falling below 6.00% for the first time since October 2022.Furthermore, following another Bank of England base rate rise in December 2022, the average "revert to" rate or Standard Variable Rate (SVR) has continued to climb. At 6.64%, this rate is now the highest on record since November 2008 (6.77%). The gap between the average two-year fixed rate mortgage from two years ago (2.52%) and the current average SVR continues to widen, with a difference of 4.12%.
| 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% |
| 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% |
| 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% |
| 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% |
| 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 | ||||||
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. However, it is clear that both these average rates stand higher compared to a year ago, with notable rises during the tail end of 2022 during a time of unprecedented uncertainty surrounding interest rates. 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 6.00%. The consecutive Bank of England base rate rises have fuelled a rise to the average SVR, which has now reached 6.64%, the highest on Moneyfacts records since November 2008 (6.77%), making it imperative for borrowers to check their rate and consider remortgaging.
“As existing mortgage holders weigh up their refinancing plans and others debate their home purchase desires in 2023, it is imperative they seek independent financial advice to go through the options available to them. 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.”