Mortgage shelf life hits record low – how to secure a deal before it disappears

The average life span of mortgage deals has shrunk to a record low of just eight days as lenders have rushed to pull and reprice deals at the fastest rate seen since records began in 2011. Borrowers are facing a race to secure mortgage deals as they are disappearing at an even faster rate than when chaos ensued from Liz Truss’s mini-budget in 2022 - the shelf life of mortgage deals at that time was fifteen days.

Interest rates have rocketed since the beginning of March as lenders contend with the extreme uncertainty caused by the war in the Middle East - overall mortgage product choice available to borrowers contracted by 17% in just one month. Revealing the current landscape, Rachel Springall, Finance Expert at Moneyfacts UK, said, “Concerns surrounding the possibility of inflation getting out of control this year has completely flipped the projected path of interest rates.”

How shrinking mortgage shelf life affects borrowers

In relatively stable mortgage markets, deals last an average of around 20 days, giving prospective borrowers ample opportunity to compare them before taking steps to complete an application, which, when accepted, will secure the deal. The current volatility, reflected in the short life span of mortgage deals, means applicants have a much smaller window to find, compare, and apply for a mortgage. The effect of the war in the Middle East on domestic inflation remains unpredictable, making it difficult for lenders to assess how borrowing costs may change. This has led lenders to pull deals to reprice them amid a frequently fluctuating outlook.

Mortgage choice has contracted, with the total number of mortgages available falling from 7,484 in March to 6,201 in April - that’s 1,283 fewer mortgage products for borrowers to choose from. First-time buyers are at the sharp end of this fall in mortgage choice as the number of mortgages available with a 5-10% deposit has fallen from 1520 to 1,127 - a fall of over 25%.

Add to this borrowers’ hesitation to lock in the relatively high rates in case rates start to fall, and we have a very confusing landscape for homebuyers to navigate. Fixed rate mortgage deals have changed course dramatically, after a period of steady fall that was expected to continue. Instead, predictions have fluttered between one rate rise this year, and three rate rises, where we will land is still difficult to ascertain due to the turbulent negotiations for a ceasefire over the weekend.

The average 2-year fixed interest rate on a mortgage, according to Moneyfacts UK, has risen from 4.84% in March to 5.84% in April - on a typical £250,000 repayment mortgage over 25 years, that equates to an extra £1,777 in mortgage payments over one year. You will find the most recent mortgage rates updated in our regularly updated article, "Best mortgage rates in the UK".

How to secure the best mortgage deals fast

When mortgage products have a short shelf life, borrowers need to act fast to secure a rate when they find one. An average shelf life of eight days means that many deals will be available for an even shorter period of time, and these are likely to be the more competitive deals in the market. You may find that less competitive and variable rate mortgage deals are less volatile and have a slightly longer shelf life, but it is best not to be complacent in taking action should you see a deal that suits your needs.

The first step to securing the best mortgage deal is to search the market for the best interest rate and the most suitable product type. Work out whether you would like to fix your mortgage interest rate and, if so, for how long. Variable rates are currently lower and could feel more attractive than the best fixed-rate deals available. However, you should ensure that you have weighed up the pros and cons of this type of mortgage before finalising your choice. You can read more about them in our article, “What is a variable rate mortgage and is it a good choice for me?".

You can find the best mortgage rates using our mortgage rate comparison tool, which searches over 90 lenders’ mortgage deals based on your specific requirements. You can sort the mortgage deals by interest rate or by overall cost, as well as based on the lender’s mortgage fee, depending on what is most important to you. The tool will provide you with the interest rate, lender fee and monthly payment but cannot check if you meet the requirements for the mortgage - you will need to meet the lender’s qualifying criteria. This is where it can be extremely helpful to engage with a mortgage broker. Mortgage brokers have in-depth knowledge of the mortgage market and also have access to deals that lenders sometimes provide on an ‘intermediary-only’ basis - that means you wouldn’t be able to access them without using a mortgage broker. A mortgage broker will help you to save time by steering you towards mortgage deals that you are likely to meet the criteria for and will assist you with the application process, following it through to acceptance.

It is vital to note that an agreement in principle will not secure a mortgage rate for you; it simply gives you an indication of the amount of money you may be able to borrow. You will need to complete the full mortgage application, undergo affordability checks, and receive a mortgage approval letter to secure the mortgage deal. Once secured, most lenders will hold the deal for a few months to allow for property searches and any chains to complete on your purchase. It is also useful to know that you should be able to switch to a better deal if one transpires before you complete on your secured deal if you have not completed.

Mortgage holders looking to remortgage can follow the same process to secure the best remortgage deal and can usually lock in a rate up to six months before their current deal expires. Again, you can stay open to a better deal becoming available between locking in a rate and switching to the new mortgage deal.

If you do not have a mortgage broker, you can find one using the online financial professionals directory, Vouchedfor* where you will find mortgage brokers listed in your local area alongside their specialisms and customer reviews to help guide you in making your choice. Alternatively, you can use the online and over the phone mortgage broker, Habito* where mortgage brokers provide free mortgage advice and guidance based on a full search of the mortgage market. Either way, a mortgage broker can provide you with more assurance that you have secured the best rate and help you take timely action to ensure you do not miss out. Mortgage applications are not always straightforward, so the guidance can be priceless for avoiding unnecessary delays and obstacles when completing the purchase of your property or remortgaging your current deal.

 

 

If a link has an * beside it this means that it is an affiliated link. If you go via the link, Money to the Masses may receive a small fee which helps keep Money to the Masses free to use. The following link can be used if you do not wish to help Money to the Masses or take advantage of any exclusive offers - Habito, Vouchedfor