Moneyfacts UK Mortgage Trends Treasury Report data reveals the average shelf-life of a mortgage has dropped to 16 days, down from 36 days a month prior.
Month-on-month the average 2- and 5-year fixed mortgage rates fell by their biggest margins in almost six months.
Average mortgage rates on the overall 2- and 5-year fixed rates fell by 0.13% and 0.10% to 5.39% and 5.22% respectively.
The drops to the 2- and 5-year average rates month-on-month were the biggest cuts since the start of October 2024 (0.16% and 0.13% respectively).
AVERAGE SHELF-LIFE
The average shelf-life of a mortgage product fell to 16 days, from 36 days a month ago.
At the start of March 2024, the average 5-year fixed rate was 5.34%; compared to the start of this month, the rate is 0.12% lower at 5.22%.
However, the average 2-year fixed rate has fallen by 0.37% over the same period, down from 5.76% to 5.39%.
The average 2-year fixed rate is 0.17% higher than the five-year equivalent but the gap is at its lowest margin since January 2023 (0.16%). The 2-year fixed rate has now been higher than the 5-year equivalent since October 2022.
MORE PRODUCT CHOICE
Product choice overall rose month-on-month, to 6,684 options. Product numbers are up year-on-year (6,004) and are at their highest number since February 2008 (6,760).
The average 2-year tracker variable mortgage rate fell to 5.18%.
The average ‘revert to’ rate or Standard Variable Rate (SVR) fell to 7.68%. In comparison, the highest recorded was 8.19% during November and December 2023.
FIERCE COMPETITION
Rachel Springall, Finance Expert at Moneyfacts, says: “The rate cutting momentum was prevalent during February, with the average 2- and 5-year fixed rates seeing their biggest cuts in almost six months.
“Such fierce competition in the aftermath of a typically subdued time of year, showed a mix of moves but it led to the average shelf-life of a mortgage plummeting to 16 days at the start of March, down from 36 days at the start of February.
“The churn of ranges and rate moves circulated around swap rate volatility but also due to a drop to the Bank of England base rate near the start of the month.”
Lenders typically act within a couple of weeks of any fierce rises or falls to swap rates.
But Springall adds: “However, it is uncertain whether the rate cutting sentiment will be sustained in the weeks to come, particularly by significant margins, but the millions of borrowers due to come off a cheap fixed deal will be hoping for further falls, without doubt.
“Borrowers who have little equity or indeed a small deposit, may be pleased to see rates have dropped lower, with the average 2-year fixed rate at 95% loan-to-value seeing its biggest month-on-month cut in six months.
“Indeed, this month the rate fell by 0.11%, the biggest cut since September 2024 of 0.14%, when the rate was last above 6% at 6.03%, down from 6.17% a month prior. It’s positive to see the rate drop further below 6% for those who may need to opt for a short-term fixed mortgage due to their circumstances.
FIRST-TIME BUYERS
And she adds: “However, the 5-year equivalent deals at 95% loan-to-value continue to be priced lower on average, by 0.20%. First-time buyers in particular will have exhausted most of their savings for a deposit, so it’s important to find a deal with a competitive rate, but also cost-saving incentives.
“Outside of the higher loan-to-value ratios, the number of deals at lower loan-to-value ratios rose up month-on-month, boosting choice for borrowers.
“As the Bank of England base rate cuts slowly get passed by lenders onto their customers’ Standard Variable Rate (SVR), the average rate has dropped down to 7.68% at the start of March, its lowest since July 2023 (7.67%) when base rate sat at 5.00%.
“The incentive to remortgage from an SVR remains and it’s wise to use a broker to find the most suitable choice before falling onto such a rate. Borrowers must make sure to look beyond the headline grabbing low fixed rates on the market and pick a deal that provides the best cost-saving package.”
