Martin Lewis gives advice on overpaying on your mortgage
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Mortgage market volatility appears to remain rife as recent analysis by money comparison site Moneyfacts shows lenders are pulling products at record speed. The shelf life for an average fixed rate mortgage deal has fallen from 17 days in December to 15 days this month.
Rachel Springall, finance expert at Moneyfacts, said: “Product choice within the mortgage market has improved in recent months, and the latest figures show volumes are at a much more stable level, however, the volatility with lenders adjusting such deals remains as the average shelf life of a mortgage product fell to 15 days, the joint lowest on Moneyfacts records.
“This activity has led overall fixed rates to fall and indicates the focus of lenders’ repricing strategies.”
The deals available on the mortgage market typically come with a shelf-life and once this is met, lenders will pull the deals and replace them with a different rate or terms.
The rates offered when deals are repriced can rise or fall, but this all depends on a number of factors, such as the financial environment at the time.
However, Ms Springall continued: “Borrowers concerned over interest rates may well be relieved to see both the average two and five-year fixed mortgage rates fell month-on-month, down by 0.22 percent and 0.17 percent, respectively.”
Average interest rates are now resting at 5.79 percent and 5.63 percent respectively, following 13 consecutive months of rises recorded up to November 2022.
This is the first time the average two-year fixed rate has dropped below six percent since October 2022 when uncertainty prevailed.
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But, Ms Springall noted: “It is clear that both these average rates stand higher compared to a year ago, with notable rises during the tail end of 2022 during a time of unprecedented uncertainty surrounding interest rates.”
According to Moneyfacts’ analysis, average rates of higher loan-to-value brackets are also falling.
Although, Ms Springall said: “More improvement would be welcomed for those with a limited deposit, considering the average two-year fixed rate mortgage at 95 percent loan-to-value sits above six percent.”
Consecutive Bank of England Base Rate rises, now hitting a 33-year high of 3.5 percent, have been the driving force behind the average standard variable rate (SVR) mortgage now reaching a record 6.64 percent.
Ms Springall said this is the highest rate on Moneyfacts’ records since November 2008, when rates hit 6.77 percent.
Ms Springall said this makes it “imperative for borrowers to check their rate and consider remortgaging”.
She continued: “As existing mortgage holders weigh up their refinancing plans and others debate their home purchase desires in 2023, it is imperative they seek independent financial advice to go through the options available to them.
“The cost of living crisis and inflated interest rates over recent months may well impact borrowers’ intentions of getting a new deal.
“However, it is anticipated that fixed interest rates will fall further in the months to come to entice new business.”
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