Shortest Mortgage Deal Tenure in Six Months Revealed by Research
In the ever-evolving world of mortgages, the first quarter of 2024 has seen a significant shift. Jo Jingree, a financial advisor at Mortgage Confidence, has noted that some lenders are giving only a few hours' notice of a rate change, creating a challenging situation for borrowers and brokers.
This rapid change in the market is primarily due to rising delistings by sellers, uneven regional market conditions, and cautious buyer behaviour amid mortgage rate fluctuations. As a result, mortgage deals are being withdrawn faster, reducing the available housing supply. Consequently, buyers may face more competition and limited options in certain regions, while sellers in some areas are discounting prices to attract buyers.
Despite this, the recent drop in mortgage rates to their lowest since October 2024 offers a glimmer of hope. However, fluctuating economic factors and cautious Fed policy contribute to this volatility.
New research published yesterday reveals that homeowners and buyers are currently enjoying the widest range of mortgage options in 16 years. According to Moneyfacts, the financial information service, the average shelf life of a mortgage deal has decreased from 28 days in early February 2024 to a six-month low of 15 days as of recent research.
Rachel Springall, finance expert at Moneyfacts, commented that this rate volatility led to a rise in both the overall average two- and five-year fixed rates. However, she notes that fixed rates remain lower than at the start of 2024, and there are still some decent options available for borrowers to compare.
For borrowers with a 5% deposit, the choice has also increased, with over 30 deals available at 95% loan-to-value - the highest count since June 2022.
However, Ms. Springall advises borrowers to remember the incentive to switch away from a Standard Variable Rate (SVR). All attention is focused on the Monetary Policy Committee and their future rate-setting, along with the swap rate market, to determine whether mortgage rates will decrease this year.
In summary, the mortgage market is experiencing a period of increased volatility, with the average rates for two-year fixed deals increasing to 5.76% and five-year fixed deals reaching 5.34%. Despite this, the research shows that homeowners and buyers are currently enjoying the widest range of mortgage options in 16 years. Borrowers are encouraged to stay vigilant and compare their options carefully, as the market continues to evolve.
Borrowers should be cautious due to the shortened average shelf life of mortgage deals, now at only 15 days, prompting them to compare and invest wisely in their personal-finance. With a wider range of mortgage options available than in the past 16 years, it's essential for business and financial-advisors to stay updated on the volatile market and offer guidance on the best policies for their clients, considering the rising overall average two- and five-year fixed rates.
