Average two and five- year mortgage rates fell over July, halting five months of consecutive rises, analysis from Moneyfacts has revealed.
Moneyfacts UK Mortgage Trends Treasury Report found the average two-year fixed mortgage rate fell to 5.77 per cent on August 1.
This represented a fall on the 5.95 per cent that was recorded in July and the 6.58 per cent that was recorded a year prior in August 2023.
Similarly, the average five-year fixed rate also experienced a drop, falling to 5.38 per cent in August from 5.53 per cent in July.
It also saw a decrease on a yearly basis from 6.37 per cent.
Moneyfacts finance expert, Rachel Springall, said: “Borrowers will be pleased to see that fixed mortgage rates fell month-on-month and the average two- and five-year fixed mortgage rates are now at their lowest point since August.”
Springall added there is an expectation for these rates to fall further in the weeks ahead, citing the recent 0.25 per cent base rate cut as a motivating factor.
Volatility
The research additionally suggested that volatility within the mortgage market is “evident” due to the fluctuations in product shelf life.
The research reported that in August the average shelf-life had dropped to just 17 days.
This was a substantial fall from the 30 day shelf-life that had been recorded just the previous month.
“Lenders re-priced their deals with vigour during July to falling swap rates, and the volatility within the mortgage market was made clear by the notable drop in average shelf-life of a mortgage,” Springall stated.
She also discussed the amount of product choice available to mortgage borrowers over August, pointing out that it had slowly risen.
The rise and fall of product choice was “significant” during July with the total count peaking at 6,949 on July 19 before falling to 6,621 just four days later.
However, this slowed in the coming days to sit at 6,657 on August 1, just one shy of July’s entire product count.
This was not uniform as Springall pointed out that some LTV brackets saw decreases in the product choice with the 80 per cent LTV bracket experiencing a drop of 53 products.
While she acknowledged this may come as disappointing news to borrowers with a limited deposit or equity, Springall pointed out that the choice could well “bounce back” in the coming months as lenders reassess their approach to lending.
tom.dunstan@ft.com
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