The number of mortgages available on the market in November fell from 6,645 to 6,402 month-on-month, the largest reduction since July last year.
The Moneyfacts Treasury Report found that despite this notable decline in mortgage options, there was still more choice than November last year when there were 3,117 products and just after the mini Budget in November 2022, when the product count was 5,678.
Product choice was also slightly lower than in May, which had 6,565 mortgages on the market.
More options for low deposit borrowers as shelf life shortens
The Moneyfacts data showed there were more mortgages available for borrowers at higher loan to value (LTV) tiers.
In November, the product count at 95% LTV rose slightly from 351 to 358 month-on-month. At 90% LTV, options declined marginally from 751 in October to 748 in November.
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At the lower 60% LTV band, there were 758 mortgages on the market, compared to 775 the month before.
Mortgages were on the market for shorter periods in November, with the average shelf life falling to 17 days. By comparison, mortgages were on the market for an average of 21 days in October and 28 days in May.
Average mortgage shelf life was also 17 days in November 2022, just after the mini Budget.
Rachel Springall, finance expert at Moneyfacts, said: “Borrowers will be disappointed to see product volatility within the mortgage market, as choice plummeted and the shelf life of a deal plunged to 17 days, down from 21 days month-on-month. These moves make it essential for prospective borrowers to act quickly to secure a new deal.
“There will be many borrowers coming off a cheap rate in the months ahead, so it’s imperative they seek a new offer and not default onto an expensive revert rate. A longer-term fixed deal may be popular for peace of mind, but borrowers may remain on the fence on fixing for longer.”
She added: “There are expectations that the Bank of England will bring down base rate further next year, but recent events have led to uncertainty on fixed rate pricing. Swap rates have been on the rise since the Budget and lenders will traditionally increase fixed rates in response.”
Average mortgage rates stay level
There was a small change recorded in average mortgage rates across all LTVs, with the typical two-year fixed rate dropping marginally from 5.4% to 5.39% in November, and the average five-year fixed rate rising from 5.07% to 5.09%.
The difference between the average two- and five-year fixed rate is now 0.3%.
On average, mortgage costs were cheaper for borrowers with a smaller deposit or equity.
At 95% LTV, the average mortgage rate for a two-year fix was 5.83% in November, down from 5.89% the month before, while the average five-year fixed rate fell from 5.44% to 5.4%.
Similarly, the average two-year fixed rate at 90% LTV declined from 5.73% to 5.7%. However, the average five-year fixed rate rose slightly from 5.22% in October to 5.24% this month.
At 60% LTV, the average two-year fixed rate rose from 4.84% to 4.86% month-on-month, and the average five-year fixed rate went up from 4.57% to 4.66%.
The typical standard variable rate (SVR) was relatively flat at 7.95%.
Despite the base rate falling to 4.75% this month, the average two-year tracker rate increased from 5.67% in October to 5.71% in November.
Affordability is still a hurdle
Springall said the outlook for would-be buyers “might not be very rosy” as fixed rates were forecasted to rise and the nil rate threshold on stamp duty for first-time buyers would fall to £300,000.
She added: “It’s evident then, that new buyers will want to rush to make this window of opportunity, but this will be a hurdle if they have not accumulated a hefty deposit. Mortgage affordability remains a key issue for these borrowers, but their importance to keep the market moving is undeniable. It is essential lenders make every effort to support these borrowers while also encouraging their existing customers to secure a new deal.
“Lenders will no doubt be keeping a very close eye on the markets over the coming weeks and any borrowers concerned about mortgage affordability should seek independent advice with haste. As we have seen over the past month, mortgage deals are never guaranteed to last very long, and should this situation prolong, it poses a challenge for borrowers who are not quick off the mark.”
