People attempting to sort their mortgage are finding the best deals are not staying around for long.
The average shelf-life of a mortgage product has plummeted to 15 days, according to Moneyfacts, down from 28 days at the start of last month.
This is the lowest average recorded in six months and not far off the record low of 12 days in July 2023 when mortgage rates reached their peak.
Don’t delay: The average shelf-life of a mortgage product plummeted to 15 days, a six-month low and down from 28 days at the start of February
The news may come as a surprise, given inflation is abating and the Bank of England has held base rate at 5.25 per cent since August. The market in theory should be more stable.
However, in recent weeks lenders have been continually upping rates, some twice in the same week and others doing so at a moment’s notice.
Yesterday alone, five lenders announced rate hikes, including several of the UK’s largest banks.
Santander, NatWest, the Co-op Bank and Principality Building Society upped rates with Halifax increasing some of its rates from tomorrow.
Nicholas Mendes, mortgage technical manager at broker John Charcol said: ‘Mortgage rates are continuously being repriced even to the extent, we’ve seen lenders reprice twice in a week, with some lenders providing little to late notice of a rate change.’
‘Mortgage brokers have called for a 24-hour rate notice pledge to help ensure clients are able to secure the best deal, which encompasses consumer duty.
‘Unfortunately, mainly building societies have agreed with only NatWest being the only high street lender recently pledging to the 24 hours or provide as much notice as possible.’
Bad news: Lenders have been swift to reprice their mortgages this week
Why are lenders pulling deals?
When it comes to fixed mortgage rates, market expectations and pricing is reflected in Sonia swap rates.
Mortgage lenders enter into these agreements to shield themselves against the interest rate risk involved with lending fixed rate mortgages.
Put more simply, swap rates show what lenders think the future holds concerning interest rates and governs their pricing.
As of today, two-year swaps are at 4.46 per cent and five-year swaps are at 3.85 per cent.
This is up compared to the start of the year when two-year swaps were 4.04 per cent and five-year sat at 3.4 per cent.
Karen Noye, mortgage expert at Quilter added: ‘The mortgage market is definitely a difficult place to work at the moment with the constant changes and updates.
‘The biggest influence of product changes by the mortgage lenders is obviously the swap rates and whilst we have seen inflation and the base rate settle, market forecasts and predictions seem to be changing daily with what will happen with future interest rates and inflation which then does impact on the market rates.
‘Lenders also adjust their products according to their service levels as well. If they have an uptick in applications and fall behind with processing they will change their rates to try and slow down applications however in the current market that’s less likely to be the case with transactions being low.’
What does this mean for borrowers and brokers?
The reality is that it makes things hard for both borrowers and brokers. Those who dither or fail to get their application away could end up kicking themselves when they are told that the rate they thought they were getting is no longer available.
Nicholas Mendes of John Charcol says the constant changes are making life harder for brokers.
‘The impact this has on a broker is very rarely spoken about as a mortgage broker is busy continuously looking to make sure clients secure the best possible deal.
‘When a lender provides little notice there pulling rates at the end of the day or with a couple of hours’ notice, brokers need to act quickly to ensure clients documents are ready and applications submitted which is why you often see brokers working late into the night, early starts to ensure submissions are done before the deadline, unable to attend family events or even working into the weekends.’
Heading back up: Mortgage rates are rising again after almost six consecutive months of cuts
To avoid disappointment, people are being urged to plan ahead and ensure they have all their paperwork to hand in order to kickstart an application and reserve a rate before it gets pulled.
‘For anybody that’s looking to get a new mortgage, I would recommend getting all your paperwork in order first so there are no unnecessary delays with completing an application and securing the interest rate,’ says Noye.
‘Many of the lenders still today give very little – notice some can be as little as a few hours that rates are going to be pulled.
‘Speaking to a mortgage professional can help with navigating the current mortgage market and ensuring the most suitable deal based upon each individual personal circumstances.
‘It is important to mention that borrowers shouldn’t panic and just accept a deal on whim without taking advice as this could be costly in the long run. Also preparing a good six months in advance can also help especially when remortgaging.’
Mortgage choice reaches 16-year high
While the best deals may be constantly changing, the number of deals on the market has reached a 16-year high according to Moneyfacts.
It says product choice overall rose month-on-month, to 6,004 options, its highest level since March 2008.
Rachel Springall, finance expert at Moneyfacts, said: ‘Mortgage choice recorded the biggest month-on-month rise in six months, with mortgage options for borrowers overall breaching 6,000, the largest amount seen in 16 years.
‘A deeper dive into the loan-to-value sectors reveals good news for borrowers with limited deposits.
‘Indeed, product choice at 90 per cent loan-to-value rose by 80 deals month-on-month, now at its highest count in four years (March 2020 – 779).
‘This is a positive move, as choice dipped a month prior (February 2024 – 681). Those borrowers with just a 5 per cent deposit will also find a rise in choice, as there are now over 300 deals on the market at 95 per cent loan-to-value, the highest count since June 2022 (347).
‘However, prospective first-time buyers still have affordability challenges to overcome amid volatile house prices and a lack of affordable housing before they even consider that the average rates on a two-year fixed deal at 90 per cent and 95 per cent LTV sit at 5.99 per cent.’
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