Average mortgage shelf-life doubles in July

Borrowers now have longer to secure a mortgage deal, as well as having more deals to choose from.

Mortgage deals were available for an average of 30 days at the start of July, up from just 15 days in June. This is according to data from the Moneyfacts UK Mortgage Trends Treasury Report.

The increase is even more notable when you compare it to one year ago, when the average shelf-life of a mortgage product stood at just 13 days, the lowest on Moneyfacts’ records.

As deals are now available for longer before being withdrawn or repriced, this could indicate that the mortgage market is improving for borrowers.

“One notable difference month-on-month has been a return to the stability in the shelf-life of a mortgage deal,” commented Rachel Springall, Finance Expert at Moneyfacts.

“Lenders have been repricing their deals in response to volatile swap rates, which calmed during June,” she explained.

Product choice rises

After rising to 6,629 at the start of June, the number of mortgage products on the market increased once again to 6,658 at the start of July. This is the highest this number has been since February 2008.

By contrast, in July 2023, there were just 4,396 mortgage products to choose from.

Taking a more in-depth look at the type of products available, the number of deals with a maximum loan-to-value (LTV) of 95% rose to 361, its highest point since May 2022.

Although the number of deals with a 90% LTV stayed the same as the previous month at 792, it’s encouraging that there are still significantly more available than one year ago when there were just 525 of these products on the market.

Rates continue to increase

As they have done since February, average mortgage rates continued to creep higher in the month to July.

The average two-year fixed rate rose from 5.93% to 5.95% while the average five-year fixed rate rose from 5.50% to 5.53%.

Average rates on deals with a higher maximum LTV of 90% and 95% increased between June and July, with the average two-year fixed rate on 95% LTV deals seeing a particularly significant rise from 6.20% to 6.26%.

Meanwhile, the average rates on deals with a maximum LTV of 60% saw no change between June and July.

Borrowers may be disappointed to see yet another month without any drops, but it’s worth bearing in mind that average rates are still lower than one year ago. And, with a cut to the base rate looking likely later in the year, there are hopes that mortgage rates will eventually start to edge lower in the coming months.

Affordability remains a challenge

Although the picture for mortgage borrowers perhaps looks more positive than it has done previously, concerns around affordability remain.

Indeed, the latest Financial Stability Report from the Bank of England estimates that more than three million mortgage borrowers are still on deals that charge less than 3% in interest.

The majority of these deals are expected to finish by the end of 2026, with a “typical” borrower potentially facing an increase to their monthly mortgage payments of around 28%, or £180. The report estimates that 400,000 households could see their payments rise by 50% or more.

But even though borrowers may be reluctant to lock into a new deal with a higher interest rate, this is likely to be a better option than reverting to their lender’s Standard Variable Rate (SVR) once their existing deal ends.

“Those borrowers coming off a fixed rate deal this year will note the average Standard Variable Rate is above 8%, so considering a lower rate fixed or tracker mortgage would be wise,” Springall commented.

“There are over 400 different tracker mortgages on the market, and any that track the Bank of England base rate may suit those who believe that base rate will come down before the year is over,” she continued.

Before deciding anything, it’s a good idea to compare mortgage rates and seek advice from your lender or an independent mortgage broker to help you work out what mortgage option may be most suitable for your circumstances.