Mortgage rates may be dropping but product choice has also fallen for homebuyers.
Data from comparison website Moneyfacts shows mortgage product choice has reduced by the largest amount in more than a year so far in November, with the average shelf-life of a mortgage also dropping from 21 to 17 days.
Product choice has fallen month-on-month to 6,402 options, the biggest monthly drop since July 2023. Product numbers are substantially higher than two years ago though when it was 3,117.
Average mortgage rates on the overall two-year fixed rate have dipped by 0.01% and the five-year fixed rate rose by 0.02% to 5.39% and 5.09% respectively as of the start of November.
Rachel Springall, finance expert at Moneyfacts, said: “Borrowers will be disappointed to see product volatility within the mortgage market.
“These moves make it essential for prospective borrowers to act quickly to secure a new deal. There will be many borrowers coming off a cheap rate in the months ahead, so it’s imperative they seek a new offer and not default onto an expensive revert rate.
“A longer-term fixed deal may be popular for peace of mind, but borrowers may remain on the fence on fixing for longer. There are expectations that the Bank of England will bring down base rate further next year, but recent events have led to uncertainty on fixed rate pricing. Swap rates have been on the rise since the Budget and lenders will traditionally increase fixed rates in response.”
First-time buyers looking to secure a deal will find a slight improvement in the availability of products at 95% loan-to-value (LTV) month-on-month, Moneyfacts said, and the average two- and five-year fixed rates at this LTV ratio fell.
But Springall warned the outlook for would-be buyers might not be very rosy as fixed rates are forecasted to climb next year and Stamp Duty thresholds are set to drop.
She added: “It’s evident then, that new buyers will want to rush to make this window of opportunity, but this will be a hurdle if they have not accumulated a hefty deposit. Mortgage affordability remains a key issue for these borrowers, but their importance to keep the market moving is undeniable. It is essential lenders make every effort to support these borrowers while also encouraging their existing customers to secure a new deal.
“Lenders will no doubt be keeping a very close eye on the markets over the coming weeks and any borrowers concerned about mortgage affordability should seek independent advice with haste. As we have seen over the past month, mortgage deals are never guaranteed to last very long, and should this situation prolong, it poses a challenge for borrowers who are not quick off the mark.”
| Mortgage market analysis | ||||||
| Nov-22 | Nov-23 | May-24 | Oct-24 | Nov-24 | ||
| Fixed and variable rate products | Total product count – all LTVs | 3,117 | 5,678 | 6,565 | 6,645 | 6,402 |
| Product count – 95% LTV | 141 | 254 | 347 | 351 | 358 | |
| Product count – 90% LTV | 398 | 709 | 791 | 751 | 748 | |
| Product count – 60% LTV | 340 | 619 | 748 | 775 | 758 | |
| All products | Shelf-life (days) | 17 | 20 | 28 | 21 | 17 |
| All LTVs | Average two-year fixed rate | 6.47% | 6.29% | 5.91% | 5.40% | 5.39% |
| Average five-year fixed rate | 6.32% | 5.86% | 5.48% | 5.07% | 5.09% | |
| 95% LTV | Average two-year fixed rate | 6.59% | 6.55% | 6.14% | 5.89% | 5.83% |
| Average five-year fixed rate | 6.35% | 5.93% | 5.64% | 5.44% | 5.40% | |
| 90% LTV | Average two-year fixed rate | 6.45% | 6.25% | 6.12% | 5.73% | 5.70% |
| Average five-year fixed rate | 6.24% | 5.91% | 5.57% | 5.22% | 5.24% | |
| 60% LTV | Average two-year fixed rate | 6.28% | 5.94% | 5.45% | 4.84% | 4.86% |
| Average five-year fixed rate | 6.08% | 5.47% | 5.08% | 4.57% | 4.66% | |
| All LTVs | Standard Variable Rate (SVR) | 5.86% | 8.19% | 8.18% | 7.96% | 7.95% |
| All LTVs | Average two-year tracker rate | 3.69% | 6.15% | 6.12% | 5.67% | 5.71% |
| Data shown is as at the first available day of the month, unless stated otherwise. | ||||||
| Source: Moneyfacts Treasury Reports | ||||||