Fixed rates continue to fall as mortgage choice recovers

house pricesThere has been a notable rise in mortgage product choice, surpassing 4,000 options on Moneyfacts records the first time since August 2022.

The overall two- and five-year fixed mortgage rates fell for a third consecutive month, with the average five-year fixed resting at 0.24% below the average two-year equivalent.

According to the latest Moneyfacts UK Mortgage Trends Treasury Report, product choice stands at 4,341 options, up from 3,643 in January 2023.

The latest product count sits above 4,000 for the first time since August 2022, a positive sign of stability in the aftermath of plummeting product choice surrounding the mini-Budget in September 2022. Within the individual loan-to-value (LTV) tiers, following a rise of 122 to 606, availability within the 60% LTV tier is at its highest level in three years (February 2020 – 611).

The data also reveals that the average shelf life of a mortgage product rose to 28 days – the joint highest since March 2022, a drastic change from 15 days seen a month ago. This activity could be a result of further stability among lenders, as repricing has been rife over recent months.

Both the average two- and five-year fixed rates fell month-on-month for the third month running, down to 5.44% and 5.20% respectively. The difference of 0.24% between these two rates is now the largest margin seen in almost 15 years (March 2008 – 0.31%).

Also, the average ‘revert to’ rate or Standard Variable Rate (SVR) continued to climb. At 6.84%, this rate is now the highest on Moneyfacts records since October 2008 (7.01%).

Meanwhile, the gap between the average two-year fixed rate mortgage from two years ago (2.53%) and the current average SVR continues to expand (a difference of 4.31%).

Mortgage market analysis
Feb-21 Feb-22 Oct-22 Jan-23 Feb-23
Fixed and variable rate products Total product count – all LTVs 3,215 5,356 2,258 3,643 4,341
Product count – 95% LTV 5 335 132 132 149
Product count – 90% LTV 248 735 295 435 539
Product count – 60% LTV 481 560 337 484 606
All products Shelf life (days) 40 42 15 15 28
All LTVs Average two-year fixed rate 2.53% 2.44% 5.43% 5.79% 5.44%
Average five-year fixed rate 2.73% 2.71% 5.23% 5.63% 5.20%
95% LTV Average two-year fixed rate 3.99% 3.05% 5.54% 6.13% 5.99%
Average five-year fixed rate 3.69% 3.35% 5.49% 5.82% 5.53%
90% LTV Average two-year fixed rate 3.56% 2.61% 5.33% 5.89% 5.66%
Average five-year fixed rate 3.72% 2.96% 5.12% 5.59% 5.14%
60% LTV Average two-year fixed rate 1.69% 1.82% 5.08% 5.39% 5.04%
Average five-year fixed rate 1.91% 2.06% 4.94% 5.33% 4.96%
All LTVs Standard Variable Rate (SVR) 4.41% 4.46% 5.63% 6.64% 6.84%
All LTVs Average two-year tracker rate 2.27% 1.70% 3.77% 4.48% 4.39%
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: “The mortgage market has shown notable stability with product choice, as the total number of mortgage options has breached 4,000 for the first time since August 2022. Shelf life of mortgage deals has also stabilised to 28 days compared to 15 days seen a month ago. Lenders have gradually been cutting down their mortgage fixed pricing over this period, leading to the third consecutive month of falls to the average two- and five-year fixed rates. However, rate competition appears more focused towards five-year fixed deals, and the rate difference between this and the average two-year fixed of 0.24% is the largest margin seen in almost 15 years (March 2008 – 0.31%).

“Borrowers with a limited deposit may be pleased to see choice expand month-on-month and that both the two- and five-year average fixed rates at 95% loan-to-value sit below 6% for the first time since October 2022. On the other end of the spectrum, both choice and rates at 60% loan-to-value improved, following a rise of 122 to 606, availability within this tier is at its highest level in three years (February 2020 – 611). These movements show that borrowers on both ends of these loan-to-value tiers could now find lower rates and more choice, but it would be understandable if they were to wait a bit longer for rates to come down.

“Those borrowers sitting on their revert rate may wish to note the average SVR stands at its highest point since October 2008, so switching to a fixed deal may help them reduce their monthly mortgage repayments and give them peace of mind. If borrowers want a bit more flexibility to come out of their deal quickly, a tracker mortgage could be a worthy choice, but they must keep in mind that their rate could rise as well as fall in the months to come. It is imperative borrowers take time to seek advice to ensure they are considering all the options available, particularly as fixed interest rates are expected to fall further in the coming months.”



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