The average shelf-life of a mortgage has dropped to 16 days, down from 36 days last month, while average two and five-year fixed rates saw their largest falls in almost six months, according to the latest Moneyfacts data.
Average mortgage rates on overall two and five-year fixed rates fell by 0.13% and 0.10% to 5.39% and 5.22% respectively. The drops to average rates month-on-month were the biggest cuts since the start of October 2024.
Two and five-year fixed rates are now 0.37% and 0.12% lower than in March 2024.
The average two-year fixed rate is 0.17% higher than the five-year equivalent but the gap is at its lowest margin since January 2023. The two-year fixed rate has now been higher than the five-year equivalent since October 2022.
Product choice overall rose month-on-month, to 6,684 options. Product numbers are up year-on-year and are at their highest number since February 2008.
The average two-year tracker variable mortgage rate fell to 5.18% and the average SVR fell to 7.68%, down from a height of 8.19% recorded during November and December 2023.
Rachel Springall, finance expert at Moneyfacts, said: “The rate cutting momentum was prevalent during February, with the average two and five-year fixed rates seeing their biggest cuts in almost six months. Such fierce competition in the aftermath of a typically subdued time of year, showed a mix of moves, but it led to the average shelf-life of a mortgage plummeting to 16 days at the start of March, down from 36 days at the start of February. The churn of ranges and rate moves circulated around swap rate volatility, but also due to a drop to the Bank of England base rate near the start of the month. Lenders typically act within a couple of weeks of any fierce rises or falls to swap rates. However, it is uncertain whether the rate cutting sentiment will be sustained in the weeks to come, particularly by significant margins, but the millions of borrowers due to come off a cheap fixed deal will be hoping for further falls, without doubt.
“Borrowers who have little equity or indeed a small deposit, may be pleased to see rates have dropped lower, with the average two-year fixed rate at 95% loan-to-value seeing its biggest month-on-month cut in six months. Indeed, this month the rate fell by 0.11%, the biggest cut since September 2024 of 0.14%, when the rate was last above 6% at 6.03%, down from 6.17% a month prior. It’s positive to see the rate drop further below 6% for those who may need to opt for a short-term fixed mortgage due to their circumstances. However, the five-year equivalent deals at 95% loan-to-value continue to be priced lower on average, by 0.20%. First-time buyers in particular will have exhausted most of their savings for a deposit, so it’s important to find a deal with a competitive rate, but also cost-saving incentives. Outside of the higher loan-to-value ratios, the number of deals at lower loan-to-value ratios rose up month-on-month, boosting choice for borrowers."
