Market changes
Many lenders repriced their deals throughout July as swap rates fell, which caused some volatility in the mortgage market.
After rising to 30 days at the start of July, the average shelf-life of a mortgage product dropped to 17 days on 1 August. This means borrowers have had less time to secure a mortgage deal before it was withdrawn by the lender.
Volatility in the mortgage market was also reflected in the number of deals that were available.
“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),” Springall explained.
Looking at individual loan-to-value (LTV) brackets, the number of deals at 60% and 75% LTV increased between July and August while availability of deals of 80% LTV and above fell. This may be disappointing for first-time buyers and homeowners with a limited amount of equity, but there are still plenty of options to choose from and lenders may be prepared to offer more higher-LTV deals in the coming months.
Choosing a deal
Lenders have been reducing rates even further in recent weeks, with a range of five-year fixed mortgage deals now available below 4%. However, it’s important that borrowers consider other elements of a mortgage, such as product fees, when choosing a deal and don’t just look at the initial rate.
With mortgage rates falling, some borrowers may be wondering whether to lock in a fixed mortgage or choose a variable deal, such as a tracker mortgage.
The interest rate on a tracker mortgage can rise and fall, often in line with the Bank of England base rate. And, with expectations that the base rate will continue to fall, a tracker mortgage may be an appealing option.
However, if you’re looking for more certainty with your mortgage payments, a fixed deal is likely to be more suitable.
Ultimately, it’s a personal decision as to the type of mortgage you choose. But, whatever your preferences, it’s always worth opting into a deal as the average Standard Variable Rate (SVR), which lenders move you onto if you don’t lock in a deal, stood at 8.16% at the start of the month.
To help you navigate the range of mortgage deals on offer and find the most suitable deal for your situation and preferences, it may be worth getting advice from a mortgage broker.