Rate increases by lenders in July completely reversed the fall in average mortgage rates recorded in June, the latest monthly analysis by Moneyfacts shows.
The Moneyfacts average mortgage rate, which is calculated from all fixed rates and variables on sale, rose by 12 basis points, from 5.47% in July to 5.59% at the start of August.
The jump came as lenders responded to higher swap rates, triggered by a resurgence of conflict in the Middle East.
It was a complete reversal of the 12-basis-point fall in the average rate recorded in June, when it dropped from 5.59% to 5.47%.
Fixed rates rose month-on-month in July for the first time since April, with the average two and five-year fixed rates rising by 11bps and 14bps respectively, to 5.63% and 5.66%.
Frequent repricing by lenders meant the average shelf-life of a deal fell to 11 days in July, down from 14 in June.
Mortgage product choice rose for the fourth consecutive month, increasing by 180 deals to 7,357 in July.
Moneyfacts finance expert Rachel Springall says: “Lenders were somewhat forced to u-turn on fixed rate cuts in July, knocking back the short-lived progress of three consecutive months of reductions to the average two- and five-year fixed rates.
“Persistent concerns over the future outlook of interest rates led to swap rate volatility, driven by unrest in the Middle East.
“The prolonged conflict has driven up oil and energy prices, raising inflationary fears which could in turn lead to future base rate increases by the Bank of England.
“Due to the swift action of lenders to re-price their ranges last month, the average shelf-life of a mortgage dropped to 11 days, now its lowest recorded since April, when mortgage turmoil pushed the lifespan of a mortgage down to just eight days.”
But she adds: “In positive news, mortgage product availability rose for a fourth consecutive month, with 90% of deals returning since the mass withdrawals seen between March and April.
“This includes increased choice across selected higher loan-to-value tiers, such as at 95% and 90% LTV. ”
