Shortened mortgage agreements are on the rise, according to recent findings
Mortgage rates have been on a rollercoaster ride this year, with average rates for two-year fixed deals increasing to 5.76% between February and March, and five-year fixed deals rising to 5.34% during the same period, according to research by Moneyfacts.
This volatility has caused lenders to react swiftly, repricing numerous fixed rate deals and withdrawing offers more quickly to manage risk. In typical practice, mortgage deals have rate lock periods of 15 to 30 days, but in 2024, deals are being withdrawn faster due to increased rate volatility and uncertainty in the mortgage market.
Jo Jingree, a financial advisor at Mortgage Confidence, warns that taking out a mortgage can be a huge financial commitment, and some lenders only give a few hours' notice of a rate change. Borrowers may wish to wait and see whether these rates come back down in the weeks to come, but they must keep in mind that there is still an incentive to switch away from a Standard Variable Rate (SVR).
The research from Moneyfacts has come as a shock, as homeowners and buyers are currently enjoying the widest range of mortgage options in 16 years. The count of mortgage options for borrowers overall has breached 6,000, which is the largest count in 16 years. However, the average shelf life of a mortgage deal has decreased from 28 days in early February 2024 to 15 days.
Rachel Springall, a finance expert at Moneyfacts, commented that the rate volatility led to a rise in both the overall average two- and five-year fixed rates. Fixed mortgage rates are rising, according to Ms. Springall, but she added that they remain lower than at the start of 2024, and there are still some decent options available for borrowers to compare.
All eyes are on the Monetary Policy Committee and their future rate setting, in conjunction with the swap rate market, as to whether mortgage rates will come down this year. With mortgage deals being withdrawn more quickly, it's crucial for borrowers to keep up with the changes and act promptly when they find a suitable deal.
The image associated with this article is titled "t0nia-b".
[1] Moneyfacts, "UK mortgage deals are being withdrawn faster due to increased rate volatility and uncertainty in the mortgage market." [Link] [2] Mortgage Confidence, "Taking out a mortgage can be a huge financial commitment." [Link] [3] Moneyfacts, "The average shelf life of a mortgage deal reached a six-month low in February." [Link] [4] Moneyfacts, "Borrowers with a 5% deposit will find a rise in choices." [Link]
- Amidst the increased rate volatility and uncertainty in the mortgage market, lenders are rapidly repricing fixed rate deals and withdrawing them more swiftly, shortening the average shelf life of a mortgage deal from 28 days to just 15 days.
- In this era of personal-finance management, it's essential for borrowers to stay vigilant, keep up with the changes in mortgage deals, and act promptly when they find a suitable offer. This is particularly crucial given the decreased average shelf life of mortgage deals, influenced by factors like technology and the ever-changing mortgage market.
