Mortgage Product Choice Bounces Back

15th October 2024

Moneyfacts UK Mortgage Trends Treasury Report data reveals product choice rose month-on-month after falling in the two previous months, and the average shelf-life of a mortgage remained unchanged.

Product choice overall rose month-on-month, to 6,645 options, the first rise since July 2024. With exception of July 2024 (6,658) and August 2024 (6,657), this is the highest count since February 2008 (6,760).

Product numbers have also increased substantially over the past two years, with almost treble the products available now (6,645) when compared to October 2022 (2,258).

The average shelf-life of a mortgage product remained at 21 days as a month prior.

Average mortgage rates on the overall two- and five-year fixed rate deals fell month-on-month by 0.16% and 0.13% respectively.

The overall average two- and five-year fixed rates fell between the start of September and the start of October, to 5.40% and 5.07% respectively. These rates are now at their lowest level since May 2023. The average two-year fixed rate is 0.33% higher than the five-year equivalent. The two-year fixed rate has now been higher than the five-year equivalent since October 2022.

The average two-year tracker variable mortgage fell slightly to 5.67%.

The average ‘revert to' rate or Standard Variable Rate (SVR) fell to 7.96%. In comparison, the highest recorded was 8.19% during November and December 2023.

Rachel Springall, Finance Expert at Moneyfacts, said, "Mortgage product choice bounced back after two months of falls, which is an encouraging sign for the market. Lenders continued to cut fixed mortgage rates but there was a much calmer rotation of products, as the average shelf-life of a mortgage remained at 21 days. These moves show the promising attitude of lenders to draw in new customers, which may be even more pressing as we edge closer to any of their end of year targets.

Last month falling swap rates encouraged lenders to cut rates, but a combination of the looming Budget, concerns over inflation and other global influences can result in market pricing uncertainty. However, there are still expectations for the Bank of England base rate to drop further before the year is over.

“Fixed rate pricing has been positive in recent months, seeing both the average two- and five-year fixed rates drop to their lowest levels since May 2023, and the market is in a much more positive space compared to two years ago, in the aftermath of the fiscal announcement at the end of September 2022. In fact, borrowers lost out on both choice and the cost hikes to mortgages back then.

There are almost treble the products available now compared to October 2022. Month-on-month, one of the largest loan-to-value tiers to rise in choice was at 60% LTV (775), now at its highest count on Moneyfacts' records. There was also growth in tiers at 90% and 95% respectively, good news for those with a small deposit or equity, such as first-time buyers.

“All eyes will be on the pending Budget and the next base rate decision day for borrowers, but in the meantime, it would be wise for them to seek independent advice to explore the latest options. Lenders will no doubt be watching the markets closely, so they may react to changes suddenly. As a result, as we have seen in the past, some deals could be pulled as lenders try to assess their current margins."