Mortgage product changes slow as swap rates fall – Moneyfacts

Mortgage product changes slow as swap rates fall – Moneyfacts

Mortgage lenders are adopting a wait and see approach to the economic and political uncertainty in the UK, according to Moneyfacts.

 

The average two-year and five-year fixed mortgage rates fell by only 0.01% from last month to 2.48% and 2.88% respectively.

The average shelf life of mortgage products increased from 38 to 49 days since February, which indicates that some providers have reduced the number of changes they are making to their product ranges.

The two-year swap rate, meanwhile, fell by 0.17% to 0.95% in the last month, with the five-year swap rate dropping by 0.24% to 1.07%.

The figures come from Moneyfacts Mortgage Trends Treasury Report data, which is yet to be published.

 

Providers stepping back?

Moneyfacts spokesman Darren Cook said: “Mortgage providers may be stepping back and waiting for greater economic certainty before they return to making strategic changes to their mortgage ranges.

“Further supporting a possible ‘wait and see’ approach from providers this month is the lack of movement in the average two- and five-year fixed mortgage rates.”

Cook also noted that the average two-year tracker rate showed little movement, increasing by 0.01% to 2.10%.

“This continues the trend seen in the previous month, with the average rates between February and March also either decreasing by 0.1% or not changing at all,” he added.

Cook said, however, that swap rates were subject to more significant changes, as the two-year swap rate fell by 0.17 to 0.95% and the five-year swap rate fell by 0.24 to 1.07% this month.

He added: “Swap rates have historically been a reliable indicator in anticipating which direction rates on fixed rate deals may be going.

“Significant swap rate decreases or increases for a prolonged period may indicate that the average two and five-year fixed mortgage rates are likely to follow suit, as has been seen when market speculation is rife of a suggested base rate change.”

 

Focus on first-time buyers

Not all rates were as static as the overall averages suggested, however, and the figures indicated that, amid the uncertainties around Brexit, lenders were focusing their attention on first-time buyers.

“As we have recently reported,” continued Cook, “it seems that many providers are currently focusing their efforts on higher loan-to-value (LTV) mortgages and attempting to encourage first-time buyers onto their books, with the average two-year fixed rate mortgage at 95% LTV dropping from 3.46% in January this year to 3.30% in March.”

 

SOURCE: mortgagesolutions

Add a Comment

Your email address will not be published. Required fields are marked *