Average mortgage shelf-life plummets to new low in March as number of deals shrinks

Mortgage lifespan shortens to record low with product choice falling to two-year low

Due to uncertainty caused by the ongoing conflict in the Middle East, many lenders have recently pulled deals from the market – leading to the average shelf-life of a mortgage nose-diving to a record low this month. This now sits lower at eight days than it was at the start of October 2022 (15 days) when the ‘mini-Budget’ shook the mortgage market, data from the latest Moneyfacts UK Mortgage Trends Treasury Report revealed.

What’s more the ongoing conflict has hit product availability hard, with it shrinking by approximately 17% in one month (a two-year low), Rachel Springall, Finance Expert at Moneyfacts, explained.

“The market overall has experienced the worst upheaval to mortgage choice since the mini-Budget, yet another blow for borrowers over the past five years, which includes the surge in interest rates during the summer of 2023 amid higher inflation expectations,” she continued.

How has this affected mortgage rates?

Rates have soared over the past month, with many lenders withdrawing their deals from the market.

While we have seen some of these withdrawn products return to the market, it’s been at considerably higher rates.

“Fixed mortgage rates noted sizeable marginal increases month-on-month, such as with the average two-year fixed rate rising by 1% for the first time in nearly four years, way back in November 2022. The unrest in the Middle East caused mortgage mayhem, with lenders rushing to pull products from sale and reprice at higher rates throughout March,” Springall commented.

And, in what comes as a huge blow for first-time buyers, this has resulted in almost 400 fewer options for borrowers with a 5% or 10% deposit.

What this means for borrowers

Despite optimism at the start of the year that mortgage rates might drop, the possibility of inflation increasing (due to rising oil and gas prices) has changed these predictions. While nothing is certain, and the market could change once there’s more confidence in the future of rate-pricing, the outlook is a frustrating one for borrowers coming to the end of a deal, Springall pointed out.

“If someone took out a typical mortgage now, compared to the start of March, it would cost them around £1,800 a year more in repayments on a two-year fixed deal.* Worse still, borrowing the same size loan on a typical mortgage now, compared to 2021 on a five-year fixed deal, would cost around £5,000 more in mortgage repayments over one year,” she highlighted.

However, fixed rates remain much lower than the average revert rates or Standard Variable Rates (SVR). The average SVR has stayed at 7.13% month-on-month, while the average two- and five-year fixed mortgage rates (across all LTVs) were 5.84% and 5.75%, respectively, at the beginning of April.

If your mortgage term is coming to an end, it could still be worth searching the market for a new deal that suits your needs. As the market is vulnerable to outside changes, such as we’ve seen recently with the ongoing conflict, it doesn’t always pay to wait for a cheaper deal to come along.

Discover the latest mortgage rates

See our regularly updated charts for the lowest mortgage rates. Note that the lowest rate won’t always be the most fitting option – so take into consideration the deal’s incentives and Ts&Cs. Make sure to check the mortgage against your requirements as a borrower.

To navigate “the mortgage maze” Springall recommends speaking to a mortgage broker and some forward planning to minimise the extra costs.

“Brokers are an anchor during times of turbulence as they can help borrowers understand how they can best afford a mortgage or plan the available options months in advance,” she stated, continuing that, “borrowers could try to overpay their mortgage, as paying just £100 more per month can shave almost three years off their loan and save over £25,000 in interest on a typical mortgage charging 5%”.

Should I speak to a mortgage broker?

Mortgage brokers remove a lot of the paperwork and hassle of getting a mortgage, as well as helping you access exclusive products and rates that aren’t available to the public. Mortgage brokers are regulated by the Financial Conduct Authority (FCA) and are required to pass specific qualifications before they can give you advice.

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