The latest Moneyfacts UK Mortgage Trends Treasury Report revealed that the total number of options fell to 6,842, reversing the increase seen in the previous month

The number of mortgage products available in the UK dropped in August, according to price comparison site Moneyfacts.

The latest Moneyfacts UK Mortgage Trends Treasury Report revealed that the total number of options declined to 6,842, reversing the increase seen in the previous month. Despite this monthly decline, product availability remains higher than the 6,657 options recorded in August 2024.

The average shelf-life of a mortgage product rose to 17 days, up from 16 days last month. This figure matches the average shelf-life from a year earlier, but is longer than the 13-day average seen two years ago.

Average rates for both two- and five-year fixed mortgages declined to 5.01%, with the two-year rate dropping by 0.08% and the five-year by 0.07% compared to the previous month. These rates are marginally above the sub-5% levels last seen in September 2022 and May 2023, respectively.

At the beginning of August 2024, the average five-year fixed rate stood at 5.38%. By the start of this month, it had decreased by 0.37 percentage points to 5.01%. The average two-year fixed rate saw a larger decline, dropping by 0.76 percentage points from 5.77% to 5.01% over the same period.

The Moneyfacts Average Mortgage Rate now stands at 5.04%, down from 5.11% last month and 5.65% in August 2024. This is also lower than the 6.52% average recorded in August 2023. The average two-year tracker variable rate remained steady at 4.91%. The average standard variable rate (SVR) also held at 7.42%, below the peak of 8.19% reached in late 2023.

The changing market conditions mean mortgage brokers must act quickly to secure favourable deals for clients, as product shelf-life shortens and rates fluctuate. Advising on refinancing and helping clients navigate new loan-to-income rules will be increasingly important, particularly for first-time buyers and those with smaller deposits.

Lenders had mixed attitudes to pricing during July, and the churn of products resulted in a dip in choice, cancelling out the previous month’s rise, according to Rachel Springall, finance expert at Moneyfacts.

In spite of the perhaps cautious approach, rate cuts prevailed to push the Moneyfacts Average Mortgage Rate down to 5.04% at the start of this month, edging ever so closer to dipping below 5%. Breaking down into fixed rate moves over the past six months shows where the bigger margins are being shaved off by lenders, with the average two-year rate dropping by 0.51% versus just 0.31% cut off the five-year rate, she said.

She added: However, the movement to swap rates has shown a shift back to a more traditional market, where five-year deals were known to cost extra. Such rate inversion has occurred for almost three years, starting in response to the ‘mini-Budget’ in September 2022.