The common two-year fastened mortgage fee dropped by 0.37 per cent in February to five.56 per cent, market knowledge revealed.
The Moneyfacts UK Mortgage Trends Treasury Report confirmed this was the most important month-to-month fall since December 2022.
It was the sixth consecutive month the place declines within the common two- and five-year fastened charges have been recorded, with the five-year repair falling from 5.55 per cent to five.18 per cent.
The common two-year fastened fee is at the moment 0.38 per cent greater than the five-year equal.
This time final yr, there was a 0.24 per cent differential between the 2, with the typical two-year repair standing at 5.44 per cent and the typical five-year repair at 5.2 per cent.
According to the Moneyfacts knowledge, there was little change within the common variable charges in February. The common for the standard variable fee (SVR) got here to eight.17 per cent in February, barely down from 8.18 per cent in January.
Compared to final yr, this was considerably greater than the typical SVR of 6.84 per cent.
The common two-year tracker mortgage fee stayed the identical month-on-month at 6.15 per cent, and was additionally notably greater than final yr, when it was 4.39 per cent.
Fewer offers on the mortgage market
In February, Moneyfacts recorded 5,787 mortgage merchandise available on the market, which was barely decrease than the 5,899 available in January.
This was the primary month-to-month drop since July final yr.
There are nonetheless extra merchandise available on the market than the final two years, as there have been 4,341 in February 2023 and 5,356 throughout the identical month in 2022.
The common shelf lifetime of a mortgage prolonged from 21 days in January to twenty-eight in February. This is the best determine since February final yr.
A continuing assessment of charges
Rachel Springall, finance knowledgeable at Moneyfacts, stated: “Borrowers trying to find a brand new mortgage deal could also be delighted to know fastened mortgage charges continued their downward pattern, with the typical two-year fastened fee dropping by its largest margin since December 2022. Those debtors who’ve waited patiently in recent months to refinance, or certainly are getting ready for when their mortgage deal expires, can be clever to assessment charges, as lenders are intently monitoring the unstable swap fee market, which tends to affect fastened fee pricing.
“There have been big expectations for fixed rates to fall further, and whether now is the right time to refinance will come down to an individual’s circumstances. Lenders are in constant review of their ranges, and it is likely rates will fluctuate in the coming weeks due to the noises surrounding future rate expectations.”
She added: “The recent observations made by the Bank of England (BoE) would suggest base rate is unlikely to move for a few months yet, and indeed the Monetary Policy Committee (MPC) will wait for firm evidence that inflation is under control before even considering a rate cut. Borrowers who are sitting on their SVR should be incentivised to switch their mortgage if they can, as it’s unlikely they will see their repayments drop for the foreseeable. Indeed, the average two- and five-year fixed rates are much lower than the average SVR.”
Springall stated first-time consumers can be “pleased” to know charges had fallen, including that the typical two-year fastened fee at 95 per cent mortgage to worth (LTV) had fallen beneath six per cent for the primary time since May 2023 to five.94 per cent.
She stated this was “much lower than six months ago, when it was just over seven per cent”.
Springall added: “Product selection has additionally elevated at this LTV bracket and, whereas it’s a slight enchancment month-on-month, it’s encouraging and demonstrates lenders are nonetheless eager to help debtors with small deposits. However, we’ve seen some product availability drop round different greater LTV brackets, at 90 per cent and 85 per cent month-on-month, so it is going to be attention-grabbing to see whether or not there can be additional declines in these areas over the following few months, or if it’s a short-term adjustment.
“Lenders are actively reviewing their ranges, so product choice could remain volatile, but borrowers must be quick to check deals as the average shelf life stands at 28 days, the highest in a year.”
Shekina is the industrial editor at Mortgage Solutions, YourMoney.com’s sister title within the B2B business. She has over 4 years’ expertise within the B2B publishing market, with earlier industries together with the accounting, pet, funeral, hospitality, retail and jewelry trades.
She at the moment reviews on present occasions within the mortgage market and liaises with monetary shoppers to provide sponsored content material.
Follow her on Twitter at @ShekinaMS
