There was a rise in mortgage product availability this past month, with 6,307 options now available, the highest number of mortgage products available to borrowers since February 2008.
The average rate for a two-year fixed mortgage has gone up slightly in the past month to 5.8%, according to a study by Moneyfacts.
The Moneyfacts UK Mortgage Trends Treasury Report shows a small rise from 5.76% in March 2024 in the average two-year fixed rate, although rates are still lower than in January 2024.
Both two- and five-year fixed average rates have seen an increase at the beginning of April, reaching 5.80% and 5.39%, in that order.
The two-year rate is now 0.41% above the five-year rate.
The average Standard Variable Rate (SVR) hasn’t changed, staying at 8.18%, close to the highest recorded levels last year.
The average rate for two-year tracker variable mortgages dropped to 6.14%.
The number of mortgage deals with a 90% loan-to-value has increased for a second month in a row, reaching its peak in over four years, while options at 95% loan-to-value have also risen, hitting a nearly two-year high.
The average time a mortgage product stays on the market remained at 22 days, an increase from 15 days in early March 2024. The shortest average shelf-life recorded was 12 days in July 2023.
Rachel Springall, a finance expert at Moneyfacts, commented that fixed mortgage rates have been increasing, but the recent growth in average two- and five-year rates has been modest. The stability in product availability duration brings good news to borrowers worried about interest rates rising and the limited time to secure a new deal. Notably, current rates are lower than earlier this year, which could mean significant savings compared to six months ago.
The variety of mortgage products is flourishing, with the highest counts seen in over 16 years. Increases in deals with higher loan-to-value ratios are especially beneficial for those with smaller deposits or equity, creating more opportunities, particularly for first-time homebuyers. Despite a rise this month, fixed-rate borrowing costs at 90% and 95% loan-to-values remain competitive.
Despite the increasing fixed rates, the advantages of refinancing with a fixed-rate mortgage are evident when the SVR is beyond 8%. Borrowers switching from their two- or five-year fixed rates this year might face an average interest hike of 2.50% to 3%. Springall suggests seeking advice to explore available deals and identify the most cost-effective option, especially considering how much lower rates were in previous years.
