Category: Mortgage

The average shelf life of a mortgage has nearly halved in the space of a month, according to a financial information website.

At the start of June, the typical mortgage was spending 15 days on the market before being pulled from sale, declining sharply from an average of 28 days at the start of May, Moneyfacts found.

June’s figure is the shortest average time period recorded by the website since March. The lowest shelf-life average on Moneyfacts’ records was 12 days, recorded in July 2023.

The data was sourced from the first available day of each month.

While mortgages are typically spending less time on offer, the number of products to choose from has jumped to the highest level in more than 16 years.

Moneyfacts counted 6,629 options at the start of the month, the highest level since 6,760 deals were recorded in February 2008.

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Can a lender end your fixed-rate deal early? This was the crux of a question asked by Money blog reader Michelle from Kent…

“I bought my first flat in April 2023 with a two-year fixed-rate mortgage. I got the deal with the help of a broker, who has now contacted me saying my deal is due to end in November – significantly earlier than I had expected. I’ve spoken to my lender – they said the deal I was on no longer exists. Is there anything I can do to keep my current rate?”

We asked David Hollingworth, associate director at L&C Mortgages, to answer this one…

“Fixed mortgage rates do what they say on the tin and lock in the interest rate payable for a specified period of time. Those periods will generally be blocked into market sectors and so are usually tagged as two, three or five-year fixed rates.

“Once that deal is taken, the terms cannot be changed by the lender and the rate can’t be brought to an end early.

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Around 100,000 homeowners will be faced with higher mortgage payments between now and the 4 July election, the Liberal Democrats have found.

Research commissioned by the political party, based on data from the Financial Conduct Authority (FCA), suggested this would amount to more than 3,300 households per day seeing a rise in their monthly mortgage payments. 

It found homeowners would be subjected to an average increase of £240 per month. 

The Lib Dems said Rishi Sunak’s claim that his economic plan was working after inflation fell to 2.3%, nearing the Bank of England’s 2% target, showed he was living in a “parallel universe” as families were dealing with higher mortgage payments. 

It said the Prime Minister would be facing a “blue wall reckoning”, with its data suggesting people in its stronghold constituencies Taunton Deane, Tewkesbury and North East Cambridgeshire were the worst impacted by higher household costs. 

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Around one in five new first-time buyers took out mortgage terms stretching beyond 35 years in the first quarter of this year, according to a trade association.

Some 21% of people taking their first step on the property ladder had home loans lasting for more than 35 years, UK Finance said.

The trend of longer-term mortgages is “further evidence of the ongoing affordability crunch”, as costs and house prices remain high relative to incomes, UK Finance said.

Its review added: “Although the proportion of borrowing at up to 40-year terms eased slightly in (quarter one), it remains far higher than we have seen in the past.

“This is the case for all types of borrower, but most significantly amongst first-time buyers.”

UK Finance said most first-time buyers typically do not keep their mortgage over the full term because they move house or remortgage.

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HSBC has increased the cost of selected fixed-rate mortgage deals across its residential and buy-to-let ranges, writes Jo Thornhill.

Its new remortgage rates, available direct and through brokers, start from 4.99% for a two-year fixed rate (60% LTV) with a £999 fee and 4.54% over five-years.

A number of the bank’s product transfer deals (rates available to existing HSBC customers looking to switch), have also been increased.

Brokers are braced for more lenders to increase rates this week. This is due to rises in swap rates, the rates banks use to lend to each other, as hopes fade for a cut to the Bank of England Bank Rate in June.

The reduction – from the current rate of 5.25%, probably to 5% – is now expected in August.

A number of smaller lenders, including the Hanley Economic, Principality, Saffron and Vernon building societies, have withdrawn selected mortgage deals at higher loan-to-value ratios, such as 90% LTV and 95% LTV.

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The Bank of England held its Bank Rate at 5.25% in May, as was widely expected. It’s the sixth time in a row the Rate has been frozen since it rose to its current level in August last year.

The Rate had previously undergone 14 consecutive rises (between December 2021, when it stood at just 0.1%, and last August). The next interest rate announcement will be on 20 June 2024.

The plateau in interest rate rises has been made possible by continued cooling inflation. The Office for National Statistics shows that inflation tumbled from 3.2% in March to 2.3% in April. As recently as last September, the figure was 6.7%.

Experts reckoned that continued falls in the rate at which prices are rising will prompt the Bank of England to cut its Bank Rate – which helps determine mortgage rates – possibly as soon as June when the next decision is announced by its Monetary Policy Committee (MPC), or in August at the following meeting.

The next inflation figure will be announced on 19 June with the latest Bank Rate figure coming out the following day. But the significant fall in April’s inflation rate has already prompted lenders to make cuts to mortgage costs.

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Virgin Money will be launching a number of new products as of tomorrow, Thursday 30th May.

As part of its purchase exclusive range, the lender will introduce a new 90% loan-to-value (LTV) Greener new-build 5-year fixed rate with £995 fee and £300 cashback at 4.87%.

In its product transfer range, it will add a 90% LTV residential 2-year early repayment charge (ERC) free tracker with £495 fee at 6.19%, and a 75% LTV buy-to-let 2-year ERC free tracker with £995 fee at 6.45%.

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Around 95% of people intending to move home say the election will not impact their plans, a survey has found.

Last week, Prime Minister Rishi Sunak confirmed that the general election will take place on 4 July.

This is based on a Rightmove survey between 18 and 23 May that garnered around 14,322 responses.

Historical Rightmove data around buyer demand for the 2015 and 2019 elections show “steady activity” in the lead-up to the vote.

This is measured by the number of people sending enquiries about properties for sale on the site, and year-on-year (YOY) changes had been used to mitigate seasonal peaks and troughs in the market.

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