Homeowners face most volatile mortgage market in years
Deals are disappearing and rates are yo-yoing as war in the Middle East adds to uncertainty for borrowers
Mortgage rates are lasting less than two weeks on the market before being pulled as homeowners face the most volatile year on record.
The average shelf life of a fixed deal was 13 days in September, according to the analytics and comparison website Moneyfacts. Across the whole year so far, the average has been 16 days.
It’s the shortest average survival rate in the 14 years since Moneyfacts started collecting this data and well below the previous record-low of 19 days in 2023.
Adam French from Moneyfacts said: “Brokers and borrowers are navigating the most challenging mortgage market in modern records. Not only have rates been jumping up and down, but the deals available today may not be here tomorrow.
“Much of this uncertainty comes from the economic volatility being driven by the war in the Middle East. Each rumour of reconciliation or sudden escalation has influenced swap rates [the rates at which banks lend to each other], which in turn influence the cost of funding fixed-rate mortgages.”
The figures reflect what has been a volatile year for the mortgage market — rates soared in March after the US strikes on Iran.
In the three weeks after the conflict began, lenders took more than 1,000 deals off the market, while the average two-year mortgage rate went from 4.85 per cent at the start of March to 5.9 per cent in April.
Throughout April, the average shelf-life of a mortgage deal was just eight days as banks scrabbled to cut or reprice products. Rates fell back slightly at the start of September with the average two-year fix dropping to 5.59 per cent, but a re-escalation of the Middle East conflict sparked fears that inflation would rise and a global sell-off of bonds.
This sent the yield on ten-year government-issued bonds (gilts) to its highest level since 2008, and pushed the average two-year fixed rate up to 5.98 per cent at the start of October. The average five-year fixed rate hit 6 per cent.
In September, HSBC, Nationwide, NatWest and TSB raised rates three times. Barclays raised rates four times.
Ian Harris from Propertymark, the national association of estate agents, said: “Continued volatility in swap rates is forcing lenders to reprice or withdraw products at short notice, creating added pressure for both borrowers and brokers.
“For borrowers, the key is to be prepared and seek advice early, particularly if their current fixed-rate deal is coming to an end. While it is difficult to predict where rates will go next, speaking to a mortgage broker can help borrowers understand their options and secure a suitable deal before it disappears.”
