The latest Moneyfacts UK Mortgage Trends Treasury Report data reveals a fall in the average shelf life of a mortgage to 15 days, the joint lowest on Moneyfacts records. The overall two and five-year fixed mortgage rates fell for a second consecutive month and product choice was much more stable than seen in recent months.
Product choice has improved since October 2022, up from 2,258 options to 3,643. Month-on-month, product numbers were much more stable, falling by just 87 deals, the smallest shift recorded since April 2022 (+87). This may well suggest stability has returned to the market. However, the average shelf life of a mortgage product fell to 15 days – the joint lowest on Moneyfacts records (last seen in October 2022).
Both the average two- and five-year fixed rates fell month-on-month for the second month running, down to 5.79% and 5.63% respectively, following 13 consecutive months of rises recorded up to November 2022. At 5.79%, the average two-year fixed rate dropped by 0.22% – falling below 6.00% for the first time since October 2022.
Following on from another Bank of England base rate rise in December 2022, the average ‘revert to’ rate or Standard Variable Rate (SVR) continued to climb. At 6.64%, this rate is now the highest on Moneyfacts records 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 expand (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.”
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