The latest Moneyfacts UK Mortgage Trends Treasury Report highlights significant developments in the mortgage market, with mixed news for borrowers.
While fixed mortgage rates have seen notable increases, the market is also showing signs of greater stability and choice.
The average 5-year fixed mortgage rate experienced its largest monthly rise since August 2023, climbing by 0.19% to 5.28% in November. Despite this, the rate remains 0.27% lower than at the start of the year, when it stood at 5.55%.
In comparison, the average 2-year fixed rate rose by 0.13% in November to 5.52%. This rate has dropped by 0.41% since January 2024, when it was 5.93%, showing a more substantial reduction over the year.
GAP IS NARROWING
The gap between the 2- and 5-year fixed rates has narrowed slightly, with the 2-year rate now just 0.24% higher.
In a positive turn, the average 2-year tracker mortgage rate dipped to 5.46%, while the standard variable rate (SVR) fell to 7.85%, down from its peak of 8.19% in late 2023. However, borrowers on SVR are still paying significantly more than those on fixed deals, underscoring the importance of reviewing mortgage options.
PRODUCT CHOICE
One standout trend is the increased product choice. The number of mortgage products rose to 6,486, the highest monthly increase since June 2024 and a substantial jump from 5,694 a year ago. Notably, deals at the 95% loan-to-value (LTV) tier reached 365, the highest level in over two years.
The average shelf-life of mortgage products also increased, rising to 21 days from 17 days a month earlier. This suggests lenders are stabilizing their offerings, creating more opportunities for borrowers to secure a deal.
VOLATILE SWAP RATES
Rachel Springall, a finance expert at Moneyfacts, says: “Fixed mortgage rates have risen, reflecting volatile swap rates, and five-year deals have not dropped as significantly as two-year rates.
“However, borrowers can take heart in the slight drop in variable rates and the expanded product availability.
“First-time buyers face ongoing challenges due to high property prices and deposit requirements.
“Yet, the increase in 95% LTV deals is encouraging. Looking ahead, the interplay of inflation, interest rates, and lender strategies will shape the market. Borrowers should stay informed and seek advice to make the most of changing conditions.”
2025 OUTLOOK
As 2024 closes, lenders face balancing customer retention with attracting new borrowers amid ongoing economic uncertainty.
While expectations for further Bank of England base rate cuts remain, their impact on fixed mortgage rates is not guaranteed.
For borrowers and prospective buyers, the message is clear: with growing product availability and stabilizing market conditions, now is a crucial time to explore options and secure competitive deals.
