A wider choice of products is a positive sign for borrowers
According to data from a new report, borrowers had 6,629 mortgage deals at the start of June, marking
the largest number available since February 2008. This is an increase of 1,662 compared to
June 2023, when there were just 4,967 mortgage deals on offer.
While the wider choice of mortgage products is a positive sign for borrowers, they
will need to act promptly if they want to secure a deal as the average shelf-life of a product almost halved to 15 days, compared to 28 days the previous month.
Lenders spent the first few weeks of May repricing in reaction to a volatile swap rate market, but the latter end of the month was more subdued, around the time the then government announced there would be a general
election.
As lenders reviewed their ranges, which included repricing, launches,
and withdrawals, the moves reduced the average shelf-life of a mortgage to 15 days,down from 28 days at the start of May.
STEADY INCREASE IN AVERAGE MORTGAGE RATES
Average mortgage rates have steadily increased since February, and in June, the
average two- and five-year fixed rates rose again by 0.02 percentage points.
The average two-year fixed rate stood at 5.93% at the start of June, while the average five-year fixed rate stood at 5.50%.
However, even though borrowers may be disappointed to see rates continue to rise, this was the smallest monthly increase we’ve seen this year. Furthermore, average rates remain lower than they were in December 2023.
Those coming to the end of a two- or five-year fixed mortgage will probably find that current rates are higher than their existing deal. But, with the average Standard Variable Rate (SVR) standing at 8.18%, locking into a new deal, whether that’s a fixed or variable rate option (such as a tracker mortgage), is still likely to be a cheaper option than reverting to your lender’s SVR.
ENCOURAGING SIGNS FOR FIRST-TIME BUYERS
In an encouraging sign for first-time buyers, the number of products at 90% and 95% loan-to-value (LTV) increased year-on year.
At the start of June, there were 353 products at 95% LTV and 792 at 90% LTV, increases of 124 and 156, respectively, from June 2023. This is despite several providers withdrawing their higher LTV mortgage products at the end of May.
Average rates on deals at 90% and 95% LTV increased between the start of May and the start of June, with 95% LTV deals seeing a particularly noticeable rise. The average two-year fixed rate at 95% LTV rose from 6.14% to 6.20%, and the average five-year
fixed rate rose from 5.64% to 5.73%.
STABILITY IN LOWER LTV DEALS
By contrast, the average two-year fixed rate on deals with a maximum LTV of 60%
stayed the same between May and June, while the average five-year rate dropped.
Some borrowers may be hoping that the Bank of England will cut the base rate
in the coming months, causing mortgage rates to fall.
However, many factors affect the mortgage market, making it difficult to predict the direction of mortgage rates. As a result, it’s a good idea to compare rates regularly and, when you’re ready, make sure you obtain professional mortgage
advice tailored to your situation.
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Cedar Crest Ltd – telephone UK T: +44 (0) 203 883 1017,
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– email info@cedar-crest.co.uk
Your home may be repossessed if you do not keep up with repayments.
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