Mortgages available for just 17 days

HOMEOWNERS looking to grab a new mortgage as interest rates climb may need to pounce quickly if they spot an attractive deal – as the average “shelf life” of a home loan has shrunk to just 17 days – the shortest time period in at least a decade.

Moneyfacts.co.uk said the average length of time a mortgage remains on the market is four days fewer than previous low points on its records of 21 days.

Last week, the Bank of England raised the base rate by 0.50 percentage points taking it from 1.25% to 1.75% and marking the biggest single rate jump since 1995.

Locking in to a fixed-rate, mortgage deal would help to shelter mortgage borrowers from further base rate rises, although individual circumstances vary and they would need to weigh up whether this is right for them.

A 0.50 percentage point rise on the current average standard variable rate (SVR) could add about £1,400 on to a homeowner’s mortgage payments over the next two years, according to Moneyfacts.co.uk.

The calculation is based on a £200,000 mortgage being paid back over 25 years.

Borrowers often end up on their lender’s SVR when their initial deal comes to an end.

About one in eight (12%) outstanding mortgages are SVR deals.

Eleanor Williams, a finance expert at Moneyfacts, said mortgage availability generally fell in August, with 149 fewer deals on the market than in July, although there were still more than 4,400 mortgages available.

She said: “Not only are there now fewer deals for borrowers to choose from, but the average shelf life for mortgage deals has plummeted to a new low of just 17 days this month.”

Moneyfacts’ mortgage product shelf life records go back to 2011.

Ms Williams added: “Would-be borrowers will also note that the rates on offer are continuing to climb. The average, overall, fiveyear, fixed-rate mortgage has breached 4% for the first time in nearly eight years, reaching 4.08% this month, a high not seen since October 2014 (when it was 4.08%).”

The findings were released as a separate report from financial technology firm Twenty7Tec which also said that it had also observed the availability of mortgage products continuing to fall in July.

Twenty7Tec found that the average combined salary for home buyers is rising, reaching £69,801 on July 20.