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Mortgage ‘shelf life’ reaches two-year low

Mortgage ‘shelf life’ reaches two-year low
 Credit: Pixabay via Pexels

The average ‘shelf life’ for a mortgage product has reached its lowest point since August 2018, according to Moneyfacts.

Figures from the data provider showed the average shelf life has fallen by two days this month to 28 days, half that recorded in February this year, when it was 56 days.

Eleanor Williams, finance expert at Moneyfacts, said this demonstrated the “fluid” state of the mortgage market.

Ms Williams said: “[The] average shelf life for a mortgage product has reduced to 28 days, which is the lowest on Moneyfacts’ records since providers reacted to the Bank of England base rate increasing from 0.50 per cent to 0.75 per cent in August 2018.

“It is half the average shelf life we recorded of 56 days in February of this year and suggests that borrowers have a limited time to secure their product of choice.”

The data from Moneyfacts also showed that average two- and five-year fixed rates for all loan-to-values (LTVs) have increased for the fourth consecutive month, by 0.05 and 0.08 percentage points respectively.

Average rates in the 85 per cent LTV tier saw the highest monthly increase, with the two-year fixed rate increasing by 0.19 percentage points to 3.12 per cent, and the five-year equivalent increasing by 0.18 percentage points to 3.25 per cent.

But product availability also increased for the first time since June, to 2,404, although the number of products available is less than half that of November 2019.

Ms Williams said: “It is notable that 63 per cent of the 145 additional products made available this month are offered in the 75 per cent and 80 per cent LTV sectors, where product numbers increased by 43 and 49 respectively.

“Indeed, availability increased across all the LTV tiers this month, with the exception of the limited 95 per cent and 100 per cent tiers where there was no change, and the smallest fluctuation was seen in the next highest LTV bracket at 90 per cent.

“This could be indicative of the fact that lenders are focusing their offerings towards traditionally lower-risk borrowers with a larger equity or deposit.”

 Nov-19Mar-20Jul-20Oct-20Nov-20
Fixed and variable rate productsTotal product count - all LTVs5,0775,2222,7282,2592,404
Product count - 90% LTV761779705156
Product count - 85% LTV675664356329344
Product count - 80% LTV693714563422471
Product count - 75% LTV864845655534577
Overall - all LTVsAverage two-year fixed rate2.45%2.43%1.99%2.38%2.43%
Average five-year fixed rate2.75%2.74%2.25%2.62%2.70%
90% LTVAverage two-year fixed rate2.66%2.57%2.90%3.64%3.76%
Average five-year fixed rate2.96%2.91%3.16%3.89%3.98%
85% LTVAverage two-year fixed rate2.47%2.49%2.11%2.93%3.12%
Average five-year fixed rate2.80%2.81%2.34%3.07%3.25%
80% LTVAverage two-year fixed rate2.39%2.41%2.13%2.58%2.67%
Average five-year fixed rate2.73%2.71%2.38%2.82%2.96%
75% LTVAverage two-year fixed rate2.31%2.29%1.92%2.23%2.27%
Average five-year fixed rate2.59%2.56%2.15%2.47%2.51%
Data shown is as at the first available day of the month, unless stated otherwise. Source: Moneyfacts Treasury Reports

chloe.cheung@ft.com

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