Rachel Springall, Finance Expert at Moneyfacts, said:

“The mortgage market is showing positive signs of resilience and growth, with product choice rising month-on-month. There is now more than double the number of options compared to October 2022. In the aftermath of market turmoil towards the tail end of 2022, fixed rates rose significantly, and product choice fell, with the average shelf life of a mortgage plummeting to 15 days. The market average has now stabilised to a more amenable 25 days. Two notable areas of growth across the loan-to-value (LTV) spectrum were for borrowers who have 15% or 25% deposit or equity (75% and 85% LTV respectively), as choice in these sectors stands at an all-time high on Moneyfacts’ records.

“As was widely anticipated, variable rates continued to rise, but fixed mortgage rates rest lower on a month-on-month basis. Promising as these signs may be, it is anticipated fixed interest rates will start to rise due to volatile swap rates, and for the eighth month running, the average five-year fixed mortgage rate rests lower than the two-year equivalent. Borrowers who are coming off a fixed rate deal may be understandably concerned about the rate difference between their existing rate and those on offer in the present market. In May 2021, the average two-year fixed mortgage rate stood at 2.57%, it is now more than double that. Those on a longer-term fixed mortgage may note the average five-year fixed mortgage rate in May 2018 stood at 2.91% but is now over 2% higher.

“Borrowers debating whether to fix or stay would be wise to seek advice to help them find the right option that suits their individual circumstances. As our average Standard Variable Rate (SVR) rests at 7.37%, its highest rate since 2007, those sitting on a revert rate could reduce their monthly repayments by switching to a fixed rate. However, it is vital borrowers assess the overall package of any deal before they commit and be comfortable that it is an appropriate time to refinance.”