"Lenders re-priced their deals with vigour during July due to falling swap rates, and the volatility within the mortgage market was made clear by the notable drop in the average shelf-life of a mortgage to just 17 days"
- Rachel Springall, finance expert at Moneyfacts
The average shelf-life of a mortgage deal has fallen to 17 days this month, down from 30 days a month prior, as rates begin to fall after five months of consecutive rises.
The latest data from Moneyfacts shows that average two and five-year fixed rates fell month-on-month by 0.18% and 0.15% respectively. These rates are now at their lowest level since March 2024.
The average two-year rate is now 5.77% across all LTV bands, while the average five-year fix has fallen to 5.38%. The two-year fixed rate has now been higher than the five-year equivalent since October 2022.
Despite a Bank Rate cut since last month's figures, the average two-year tracker variable mortgage rose slightly to 5.95% and the average SVR fell to 8.16%, only slightly less than the highest recorded (8.19%) during November and December 2023.
As product volatility continues, product choice overall fell slightly month-on-month, to 6,657 options.
Rachel Springall, finance expert at Moneyfacts, said: “Borrowers will be pleased to see that fixed mortgage rates fell month-on-month, halting five consecutive months of rises. The average two and five-year fixed mortgage rates fell by 0.18% and 0.15% respectively and are now at their lowest point since March 2024. Lenders re-priced their deals with vigour during July due to falling swap rates, and the volatility within the mortgage market was made clear by the notable drop in the average shelf-life of a mortgage to just 17 days, down from 30 in June. There are expectations for rates to fall further in the weeks to come, particularly as the market reflects on the 0.25% base rate cut, the first cut in over four years.
“The rise and fall of product choice was significant during July; the total count peaked at 6,949 on 19 July before falling to 6,621 just four days later. Choice slowly rose in the coming days to sit at 6,657 on 1 August, just one product shy of July’s total product count (6,658). The only increases in availability were seen in the lower 60% and 75% LTV brackets in August. At the other end of the LTV spectrum, in contrast to a prior rise in choice between June and July, the number of mortgages available at 95% LTV fell slightly by the start of August. However, the biggest month-on-month drop within any LTV bracket was at 80% LTV, which fell by 53 products, dropping to the lowest level since March 2024. This may come as disappointing news to borrowers with a limited deposit or equity, but choice could well bounce back in the coming months as lenders reassess their approach to lending at these higher LTV brackets.
“It is essential that borrowers move quickly to acquire a new deal if they are looking to refinance this year, or buy a property for the first time. The average Standard Variable Rate (SVR) is around 8% so the incentive to switch deals either to a fixed or tracker mortgage is clear. A variety of lenders priced their lowest rate deals even lower still over the past few weeks, leading to the return of sub-4% fixed rates towards the end of July, but borrowers must look beyond the initial rate and assess any mortgage based on the overall true cost.”
