These are eventful times in the world of mortgages with everything from volitile inflation at home to international crises broad having an impact on the rates and deals availble to you. But it certainly isn't all bad news on this front, and here, we have broken down exactly what's happening in the market right now.
Movement in the market
Throughout June and the first part of July, we’ve seen a continued overall fall in the price of 2-year fixed-rate mortgage deals, which are now at their lowest average rate since 2022. This downward trajectory seems to have continued in spite of the Bank of England’s (BoE) decision to hold the base rate at their last meeting on June 18. This is likely due to the fact that swap rates have fallen, and a general expectation that the BoE will make further cuts to the base rate later this year, albeit at a more gradual rate than initially expected.
Between June and July, 2-year fixed-rates fell by 0.03%, and 5-year fixed-rates by 0.01% on average. While this is, perhaps, a slower price drop than many people would like, it does seem to have ignited a pricing war, with many lenders competing to outdo each other, and the average ‘shelf-life’ of a mortgage deal now down to just 16 days. There are also currently around 250 more mortgage deals available overall than there were just last month.
How long should you fix for?
While tracker rates remain unchanged for the time being, we’re seeing competition hot up for fixed-rate mortgage deals, as highlighted above. Interestingly, there has been a narrowing of the price margin between two and five-year fixed-rate mortgage deals, which tend to be the most popular deal lengths.
This can make it a tough decision as to whether you opt for a shorter, or slightly longer fixed rate, especially when the future of mortgage rates is uncertain. More rate cuts are predicted before the end of 2025, however, if your deal is about to expire, you don’t have the luxury of holding out for that to happen unless you’re happy to sit on your lender's standard variable rate for a few months.
While shorter deals can seem more appealing when rates are expected to fall, the narrowing in price gap between the 2 products might mean that longer term security is the best option for you. It depends on your needs and circumstances, so it’s always best to run this past an experienced broker.
What is the current average standard variable rate?
Although the average standard variable rate deal has fallen to 7.42%, this is still considerably higher than the fixed-rate deals available, so it’s a good time to consider a remortgage deal if your current deal is about to end.
If you’re hoping to pick up a more competitive deal later in the year, your best bet is to lock in one of the deals available now early (usually possible 3-6 months before your deal ends, depending on the lender). This means that if more competitive deals do become available before your current deal ends, you switch to them without any fees.
You can take a look at the latest rates available right now in our guide to today's best mortgage rates.
What’s expected to happen to the market now?
While the BoE is exercising caution with their base rate reductions, financial analysts generally expect the downward trend to continue. Lenders seem to share this expectation, with many of the big six lenders making multiple cuts to their fixed-rate deals over the past week or so.
In recent days HSBC has made its second cut to fixed products within a week, and third within 2 weeks. Barclays and Halifax have also made rate reductions to their fixed-rate ranges across both residential and buy-to-let products, in an attempt to compete for the lowest deals on the market. We’ve also seen plenty of smaller lenders follow suit, with West Bromwich Building Society introducing cuts of 0.33% just this morning.
As always, this is a difficult question to answer with a strong degree of certainty, which is why it’s important to stay ahead of mortgage rate news and speak to an experienced broker to secure the latest and best deals available to you.
