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Longevity for mortgage products

Longevity for mortgage products

Category: Mortgages

Updated: 02/10/2009
First Published: 02/10/2009

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
Mortgage deals are currently enjoying a period of longevity, with the availability of current home loan packages lengthening to an average of 24 working days during September.

These figures from Moneyfacts heighten hopes that the dust may be settling on a volatile mortgage market, as the current average time that deals stay on the market is the longest since October 2007.

"The extended shelf life of a mortgage product to 24 days clearly demonstrates that rates are becoming much more static, although healthy competition within the market is still far from a reality," said Darren Cook, spokesperson for Moneyfacts.co.uk.

"We have reached a plateau in the mortgage market and rates are unlikely to move noticeably from their current levels within the foreseeable future."

Disappointingly, figures show that the cheap cost of wholesale funding looks to remain totally disjointed from the price of a new mortgage, with the average rate of new variable and fixed products remaining fairly static over the past three months.

This suggests that lenders are either unable or unwilling to pass on any savings from the lower cost of wholesale market rates.

"Many economists have predicted that the Bank Rate will remain at its record low well into the fourth quarter of 2010. We need to accept that mortgage rates are unlikely to fall much lower and that the overall cost of financing personal debt will remain high," said Mr. Cook

"If standard variable rates remain unchanged in line with the bank rate for the duration of 2010, there seems very little incentive for anybody to sacrifice a rate of as low 2.50% for a new mortgage. This could have disastrous effects for the remortgage market."

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