Mortgage rates are dropping but you need to act fast to get the best deals

Mortgage rates may be falling again but borrowers need to act fast to grab them before the top deals disappear.

Research from comparison website Moneyfacts shows the average shelf-life of a mortgage product dropped to 17 days in August, down from 30 days during July.

That means while mortgage rates are getting cheaper as inflation and the base rate falls, borrowers looking to buy a property now have almost half the time to get started applying for a deal before they come off the market.

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“Lenders re-priced their deals with vigour during July due to falling swap rates, and the volatility within the mortgage market was made clear by the notable drop in the average shelf-life of a mortgage to just 17 days, down from 30 in June,” says Rachel Springall, finance expert at Moneyfacts.

“There are expectations for rates to fall further in the weeks to come, particularly as the market reflects on the 0.25% base rate cut, the first cut in over four years.”

What is happening in the UK mortgage market?

Slowing inflation and falling swap rates have prompted lenders to cut mortgage pricing in recent weeks.

That has also been helped by the Bank of England’s interest rate cut earlier this month.

Nationwide had already pushed mortgage rates back below 4% before the interest rate announcement but other lenders have since followed suit.

Major lenders such as Barclays, NatWest, Santander, TSB and Virgin Money have cut rates in recent weeks.

Barclays, Nationwide and NatWest are currently tussling for the top of the best buy table with all three offering rates at 5.83% for a five-year fix at 60% loan-to-value.

There is a difference in fees though, which can add to the total cost.

Barclays has a £699 product fee but you will pay more with NatWest at £1,495 and £1,499 with Nationwide.

Average mortgage rates have also been pushed down overall.

Moneyfacts data shows average mortgage rates on two and five-year fixed rate deals fell month-on-month by 0.18% and 0.15% respectively, halting five consecutive months of rises. These rates are now at their lowest level since March 2024.

The average two-year fixed rate is now 5.77% or 5.38% for five years.

But borrowers need to move fast, with average shelf-life at 17 days, compared with 30 in July and 28 in February. It is at least better than the typical 13 days recorded this time last year.

How to get the best mortgage deal

Preparation is key when it comes to applying for a mortgage, regardless of the rate.

“The good news is that making an application will secure a rate and some lenders will even allow a rate to be reserved through a decision or agreement in principle,” says David Hollingworth, associate director of communications for L&C Mortgages.

“An adviser could be really helpful in grabbing a rate as they will be able to keep abreast of the market changes.  

"Not all lenders give notice but even though there can be little warning an adviser may have a better chance of alerting you that a deal you’d discussed is about to change.  They may also be able to assess how urgent a change that could be depending on whether rates are improving or edging up.”

Brokers advise having documents ready such as bank statements, payslips and proof of income.

Gary Bush, managing director of MortgageShop.com suggests checking your credit report and making use of open banking technology for quicker financial checks.

“Applications, with a full and compliant set of scanned documents being provided and an advice firm using technology to process the details, should allow for a mortgage decision and application to be processed within a day of receipt,” he says.

The lowest rate may not always be the best deal as you also need to include product fees and if you are even eligible.

If you do miss out on a new rate, it may not be too big a deal at the moment though.

“To be fair, a short shelf life at the moment isn’t a huge issue, as rates are trending down,” says Scott Taylor-Barr, principal adviser at Barnsdale Financial Management.

“So, the rate you missed is probably being replaced by a cheaper one.”