Some borrowers coming off a fixed rate this year could see their mortgage rate increase by around three percentage points from what they were paying before, according to Moneyfacts
Mortgage borrowers were spoilt for choice at the start of April, with the availability of mortgage products hitting a high not seen since 2008, as reported by a leading financial information site.
At the same time, the average “revert to” or standard variable rate (SVR) mortgage has soared above 8% signalling an urgent need for some borrowers to secure a new, more affordable deal. According to Moneyfacts, the typical SVR now stands at 8.18%, teetering near the highest level ever recorded by the firm, which was 8.19% in November and December 2023.
Moneyfacts’ records of average SVR data stretch back to July 2007. The analysis by the website was based on data from the first available day of each month.
Moneyfacts said there were 6,307 mortgage options at the outset of April, including both fixed and variable deals this is the most substantial number since February 2008, when 6,760 products were on offer. Of the total options available in April, there were 335 deals for those with a 5% deposit, marking the largest selection in almost two years since June 2022 saw 347 deals.
For those with a 10% deposit, the variety of deals reached a peak not seen since the onset of coronavirus lockdowns in the UK. A total of 774 deals were counted for borrowers with a 10% deposit, the most since March 2020, when there were 779 products up for grabs.
The average lifespan of a mortgage product settled at 22 days, a rise from just 15 days at the beginning of March 2024. The record for the shortest average shelf-life on Moneyfacts’ books was a mere 12 days in July 2023.
Rachel Springall, a finance expert at Moneyfacts, commented: “These are encouraging signs for borrowers concerned about rising interest rates and the short window of opportunity to secure a new deal.”
“It is worth noting that both the average two and five-year fixed rates are lower than they were back at the start of 2024. Borrowers will find rates are significantly lower compared to six months ago, when the average two and five-year fixed rates were 0.67 (percentage points) and 0.58 (percentage points) higher respectively.”
At the beginning of April, the average two-year fixed-rate mortgage across all deposit sizes stood at 5.80%, while the average five-year fixed rate was pegged at 5.39%. Springall further noted: “Mortgage product availability continues to thrive, with the overall choice of residential products reaching its highest point in over 16 years.”
“Deeper analysis shows that the number of deals available at higher loan-to-value ratios rose. Indeed, at 90% loan-to-value, the number of deals increased for a consecutive month, as did deals at 95% loan-to-value. There are now 1,109 deals at these ratios combined, positive news for borrowers with a limited deposit or equity. The growth in choice is good news for first-time buyers, who may be struggling to find an affordable property.”
She said that some borrowers coming off a fixed rate this year could see their mortgage rate increase by around three percentage points from what they were paying before. She said: “In April 2022, the average two-year fixed mortgage rate was 2.86%, and in April 2019 the average five-year fixed mortgage rate was 2.88%.”
She also urged potential borrowers to seek advice saying: “Seeking advice is a wise choice to help navigate all the deals available and to work out which one would be the most cost-effective option.”