‘Encouraging’ sign for borrowers as product choice hits 16-year high

Posted on Tuesday, April 9, 2024

Fixed mortgage rates have increased modestly over the past month, with the average two-year fixed rate reaching 5.8%, research from Moneyfacts has found.

The Moneyfacts UK Mortgage Trends Treasury Report found the average two-year fixed rate increased from 5.76% in March 2024. However, these remain lower compared to January 2024.

The overall average two- and five-year fixed rates rose between the start of March and the start of April, to 5.80% and 5.39% respectively.

The average two-year fixed rate stands 0.41% higher than the five-year equivalent.

The average ‘revert to’ rate or Standard Variable Rate (SVR) remained at 8.18%, just shy of the highest recorded (8.19%) during November and December 2023.

The average two-year tracker variable mortgage fell to 6.14%.

Product choice overall rose month-on-month, to 6,307 options, its highest level since February 2008 (6,760).

The availability of deals at the 90% loan-to-value tier increased for a second consecutive month (774) now at its highest point in over four years (779 – March 2020). The number of deals at 95% loan-to-value rose for a fourth consecutive month (335) and stands at its highest count in almost two years (347 – June 2022).

The average shelf-life of a mortgage product stabilised to 22 days, up from 15 days at the start of March 2024. The lowest shelf-life average on our records was 12 days in July 2023.

Mortgage market analysis
  Apr-22 Apr-23 Oct-23 Mar-24 Apr-24
Fixed and variable rate products Total product count – all LTVs 4,925 5,146 5,495 6,004 6,307
Product count – 95% LTV 367 204 252 318 335
Product count – 90% LTV 665 684 648 761 774
Product count – 60% LTV 529 702 585 677 723
All products Shelf-life (days) 21 21 16 15 22
All LTVs Average two-year fixed rate 2.86% 5.35% 6.47% 5.76% 5.80%
Average five-year fixed rate 3.01% 5.05% 5.97% 5.34% 5.39%
95% LTV Average two-year fixed rate 3.19% 5.89% 6.74% 5.99% 6.03%
Average five-year fixed rate 3.37% 5.27% 6.08% 5.46% 5.53%
90% LTV Average two-year fixed rate 2.94% 5.64% 6.39% 5.99% 6.04%
Average five-year fixed rate 3.11% 5.26% 5.78% 5.49% 5.49%
60% LTV Average two-year fixed rate 2.35% 4.95% 6.16% 5.23% 5.29%
Average five-year fixed rate 2.46% 4.65% 5.65% 4.86% 4.95%
All LTVs Standard Variable Rate (SVR) 4.71% 7.30% 8.18% 8.18% 8.18%
All LTVs Average two-year tracker rate 2.21% 5.02% 6.17% 6.15% 6.14%
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: “Fixed mortgage rates have continued on an upward trajectory, but the rises to the overall average two- and five-year fixed mortgage rates were much more modest. The volatility surrounding the shelf-life of mortgage products also stabilised. These are encouraging signs for borrowers concerned about rising interest rates and the short window of opportunity to secure a new deal. It is worth noting that both the average two- and five-year fixed rates are lower than they were back at the start of 2024. Borrowers will find rates are significantly lower compared to six months ago, when the average two- and five-year fixed rates were 0.67% and 0.58% higher respectively.

“Mortgage product availability continues to thrive, with the overall choice of residential products reaching its highest point in over 16 years. Deeper analysis shows that the number of deals available at higher loan-to-value ratios rose. Indeed, at 90% loan-to-value, the number of deals increased for a consecutive month, as did deals at 95% loan-to-value. There are now 1,109 deals at these ratios combined, positive news for borrowers with a limited deposit or equity. The growth in choice is good news for first-time buyers, who may be struggling to find an affordable property. Those with limited deposits will find the cost to borrow at higher loan-to-values across the two- and five-year fixed rates rose month-on-month, with the average two-year fixed rates at 90% and 95% breaching 6%.

“Despite rising fixed rates, the incentive to refinance with a fixed rate mortgage is a sensible option when the average Standard Variable Rate (SVR) is over 8%. However, borrowers who will come off a two- or five-year fixed rate this year may be paying between 2.50% and up to 3% more in interest on their mortgage on average. Indeed, in April 2022, the average two-year fixed mortgage rate was 2.86%, and in April 2019 the average five-year fixed mortgage rate was 2.88%. Seeking advice is a wise choice to help navigate all the deals available and to work out which one would be the most cost-effective option.”

Via @PropertyIndustryEye