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A dip in choice as rates continue to rise

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Eleanor Williams, Press Officer
Eleanor Williams, Press Officer / Finance Expert T: 01603 476205 E: Email Eleanor
07/02/2022

A dip in choice as rates continue to rise

A dip in choice as rates continue to rise

The latest Moneyfacts UK Mortgage Trends Treasury Report data shows that the start of February saw mortgage availability fall for the first time since October 2020, while the overall average two- and five-year fixed rates continued to creep upwards in advance of the Bank of England’s decision to raise base rate to 0.50%.

 

The latest Moneyfacts UK Mortgage Trends Treasury Report data shows that the start of February saw mortgage availability fall for the first time since October 2020, while the overall average two- and five-year fixed rates continued to creep upwards in advance of the Bank of England’s decision to raise base rate to 0.50%.

 

  • Following 15 months of improvement in the level of product choice for borrowers, February sees mortgage availability fall, reducing by 38 deals to 5,356. However, when compared to two years ago, there are currently 280 more deals on offer than in February 2020 (5,076).
  • Continuing the trend for a fourth consecutive month, the overall average two- and five-year fixed rates both rose. The average two-year fixed rate for all loan-to-values (LTVs) has increased by 0.06% to 2.44%, and the five-year equivalent experienced a 0.05% rise to 2.71%.
  • The overall average rate for two-year tracker mortgage products and the equivalent rate for term tracker deals both fell this month, reducing by 0.05% and 0.02% to 1.70% and 3.51% respectively. The two-year tracker average rate is 0.57% less than it was this time last year (February 2021 – 2.27%), while in contrast the average term tracker rate is 0.77% above its equivalent from February 2021 (2.74%).
  • Average shelf life of a mortgage product has increased 50% in the past month. At 42 days in February, prospective new borrowers had 14 days more to secure their chosen deal than they had in January.
  • Following 15 months of improvement in the level of product choice for borrowers, February sees mortgage availability fall, reducing by 38 deals to 5,356. However, when compared to two years ago, there are currently 280 more deals on offer than in February 2020 (5,076).
  • Continuing the trend for a fourth consecutive month, the overall average two- and five-year fixed rates both rose. The average two-year fixed rate for all loan-to-values (LTVs) has increased by 0.06% to 2.44%, and the five-year equivalent experienced a 0.05% rise to 2.71%.
  • The overall average rate for two-year tracker mortgage products and the equivalent rate for term tracker deals both fell this month, reducing by 0.05% and 0.02% to 1.70% and 3.51% respectively. The two-year tracker average rate is 0.57% less than it was this time last year (February 2021 – 2.27%), while in contrast the average term tracker rate is 0.77% above its equivalent from February 2021 (2.74%).
  • Average shelf life of a mortgage product has increased 50% in the past month. At 42 days in February, prospective new borrowers had 14 days more to secure their chosen deal than they had in January.
TR Mortgages Cover Nov21 TR Mortgages Cover Nov21 TR Mortgages Cover Nov21

 

Mortgage market analysis

 

Feb-17

Feb-20

Feb-21

Jan-22

Feb-22

Fixed and variable rate products

Total product count - all LTVs

4,109

5,076

3,215

5,394

5,356

All LTVs

Average two-year fixed rate

2.33%

2.42%

2.53%

2.38%

2.44%

Average five-year fixed rate

2.91%

2.73%

2.73%

2.66%

2.71%

Standard Variable Rate (SVR)

4.56%

4.90%

4.41%

4.41%

4.46%

Average two-year tracker rate

1.98%

2.01%

2.27%

1.75%

1.70%

Average term-year tracker rate

2.69%

3.72%

2.74%

3.53%

3.51%

All products

Shelf-Life (days)

57

56

40

28

42

Data shown is as at the first available day of the month, unless stated otherwise. Source: Moneyfacts Treasury Reports

 

 

Mortgage market analysis

 

Feb-17

Feb-20

Feb-21

Jan-22

Feb-22

Fixed and variable rate products

Total product count - all LTVs

4,109

5,076

3,215

5,394

5,356

All LTVs

Average two-year fixed rate

2.33%

2.42%

2.53%

2.38%

2.44%

Average five-year fixed rate

2.91%

2.73%

2.73%

2.66%

2.71%

Standard Variable Rate (SVR)

4.56%

4.90%

4.41%

4.41%

4.46%

Average two-year tracker rate

1.98%

2.01%

2.27%

1.75%

1.70%

Average term-year tracker rate

2.69%

3.72%

2.74%

3.53%

3.51%

All products

Shelf-Life (days)

57

56

40

28

42

Data shown is as at the first available day of the month, unless stated otherwise. Source: Moneyfacts Treasury Reports

 

Eleanor Williams, Finance Expert at Moneyfacts, said:

“Product numbers in the residential mortgage sector have dropped for the first time since October 2020, reducing by 38 to 5,356. Such a small month-on-month reduction in numbers, rather than a cause for concern, could potentially be a sign of the market returning to a level of stability after a tumultuous couple of years. There are in fact 280 more deals than were on offer in February 2020 before the onset of the pandemic.

“While fixed rate mortgage pricing is not intrinsically linked to changes in the Bank of England base rate, prior to the decision to double base rate to 0.50% last week, we had recorded increases of 0.06% and 0.05% to the average overall two– and five-year fixed rates between January and February. At 2.44% and 2.71% respectively, following four months of consecutive rises, these rates are the highest they have been since August 2021 (2.52% and 2.75%). The 60% LTV tier saw the largest monthly rises, with the two- and five-year averages going up by 0.09% and 0.08% to 1.82% and 2.06% respectively. In fact, since October the lower LTV average rates have far outpaced the overall average rate increases as providers seem to have made their most competitive pricing decisions in the top LTV brackets of late.

“Prospective new mortgage customers may see that the average shelf life of a mortgage product rose from 28 days to 42 days in February, which meant that those looking to secure a new mortgage before potential further rate rises had more time to choose a product. This could suggest that lenders had already made many of their re-pricing decisions in anticipation of the base rate rise in December 2020 and therefore January saw fewer updates made. However, conversely, this lull in activity could be a reflection of lenders holding back on re-pricing decisions in advance of last week’s move, and so it may be a different story next month.

“February also saw the average SVR rate increase by 0.05% to 4.46%, so those sitting on their lenders’ revert rate may wish to move swiftly to secure a new fixed deal to protect themselves from potential further increases. As the cost of living continues to spiral for consumers, those in a position to consider a new mortgage deal may wish to seek advice sooner rather than later.”

Eleanor Williams, Finance Expert at Moneyfacts, said:

“Product numbers in the residential mortgage sector have dropped for the first time since October 2020, reducing by 38 to 5,356. Such a small month-on-month reduction in numbers, rather than a cause for concern, could potentially be a sign of the market returning to a level of stability after a tumultuous couple of years. There are in fact 280 more deals than were on offer in February 2020 before the onset of the pandemic.

“While fixed rate mortgage pricing is not intrinsically linked to changes in the Bank of England base rate, prior to the decision to double base rate to 0.50% last week, we had recorded increases of 0.06% and 0.05% to the average overall two– and five-year fixed rates between January and February. At 2.44% and 2.71% respectively, following four months of consecutive rises, these rates are the highest they have been since August 2021 (2.52% and 2.75%). The 60% LTV tier saw the largest monthly rises, with the two- and five-year averages going up by 0.09% and 0.08% to 1.82% and 2.06% respectively. In fact, since October the lower LTV average rates have far outpaced the overall average rate increases as providers seem to have made their most competitive pricing decisions in the top LTV brackets of late.

“Prospective new mortgage customers may see that the average shelf life of a mortgage product rose from 28 days to 42 days in February, which meant that those looking to secure a new mortgage before potential further rate rises had more time to choose a product. This could suggest that lenders had already made many of their re-pricing decisions in anticipation of the base rate rise in December 2020 and therefore January saw fewer updates made. However, conversely, this lull in activity could be a reflection of lenders holding back on re-pricing decisions in advance of last week’s move, and so it may be a different story next month.

“February also saw the average SVR rate increase by 0.05% to 4.46%, so those sitting on their lenders’ revert rate may wish to move swiftly to secure a new fixed deal to protect themselves from potential further increases. As the cost of living continues to spiral for consumers, those in a position to consider a new mortgage deal may wish to seek advice sooner rather than later.”

Notes to editors

Pioneering financial comparison technology for over 30 years.

Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, business banking, life, pension and investment products in the UK.

Moneyfacts is the UK's leading independent provider of finance product data. For over 30 years Moneyfacts' information has been a key driver behind personal finance product decisions.

For more information about us please see our key facts.

Broadcast

Our broadcast suite enables our finance experts to appear in-vision for television, and we regularly comment live on national and regional radio.

To arrange an interview for radio or television, please contact our press department. We have an in-house broadcast room.

 

Notes to editors

Pioneering financial comparison technology for over 30 years.

Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, business banking, life, pension and investment products in the UK.

Moneyfacts is the UK's leading independent provider of finance product data. For over 30 years Moneyfacts' information has been a key driver behind personal finance product decisions.

For more information about us please see our key facts.

Broadcast

Our broadcast suite enables our finance experts to appear in-vision for television, and we regularly comment live on national and regional radio.

To arrange an interview for radio or television, please contact our press department. We have an in-house broadcast room.

 

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Rachel Springall Press Officer / Finance Expert
Eleanor Williams Press Officer / Finance Expert