A MORTGAGE price war has begun between lenders as fixed deals disappear faster than ever before.

Falling costs mean lenders are battling it out to offer borrowers cheaper fixed mortgage rates.

As a result, the shelf life of the average fixed mortgage deal has dropped from 17 days in December to 15 days today, according to MoneyFacts.

Deals available on the open market usually come with a shelf-life and once it's hit they're pulled from the market and repriced.

The rates offered when deals are repriced may fall or rise from previous levels – but this all depends on the current financial environment.

Right now, both two and five-year fixed rates fell month-on-month for the second month running, down to 5.79% and 5.63% respectively – down from 6.01% and 5.8% respectively last month.

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Rachel Springall, finance expert at Moneyfacts, said: "Product choice within the mortgage market has improved in recent months, however, the volatility with lenders adjusting such deals remains as the average shelf life of a mortgage product fell to 15 days, the joint lowest on Moneyfacts records."

But this isn't bad news for home buyers and mortgage holders looking to refinance.

Sarah Coles, personal finance expert at Hargreaves Lansdown said: "The short shelf lives of fixed deals is actually a positive sign that lenders are reacting to lower expectations of future rates, and are cutting their rates more often."

"The Bank of England is likely to keep pushing interest rates up in the next few months, especially if inflation remains reasonably sticky.

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"However, the looming recession means inflation is likely to pull back significantly as we get further through 2023, easing the pressure to raise rates.

"By the time we get into 2024, we’ll be looking at potential rate cuts."

It comes as more than 1.4million mortgage holders face new bill hikes of around £250 a month.

The majority of fixed-rate mortgages in the UK (57%) which are coming up for renewal in 2023 were fixed at interest rates below 2%, according to the Office for National Statistics (ONS).

And it comes as the BoE hiked its base rate for the ninth time in a row to 3.5% in December in a bid to tackle inflation.

Borrowers on fixed-rate mortgages have been cushioned from the immediate impact so far. 

But, they'll get a shock when they come to renew as average fixed rates are more than double what they were two years ago.

This resulted from the previous government's disastrous mini-Budget which caused mortgage rates to shoot up to a 14-year high in September.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: "To ensure they get the best deal possible, borrowers should seek advice from an independent mortgage broker.

"They will know which lenders are likely to pull rates at short notice so that you don’t get caught out."

And David Hollingworth of L&C Mortgages said: "Securing a new deal in advance doesn’t prevent borrowers revisiting before they complete.

"Borrowers can still check whether they are still on the best rate before completion."

We've explained how you can choose the best mortgage deal below and compared the merits of going direct or through a broker.

How to choose the best mortgage deal

There are lots of factors to consider when searching for the best mortgage deals.

The amount you can borrow and interest rate are important factors but you should also consider the type of mortgage.

Do you want the certainty of a fixed-rate mortgage or the flexibility of a tracker that could get cheaper rates and typically doesn't have exit fees?

There are mortgage calculators online that will let you compare the monthly cost of a mortgage based on the interest rate and any fees. 

A lender or mortgage broker will be able to offer advice on the best type of mortgage deal to meet your needs.

Shop around for the best mortgage deals rather than opting for the first bank you see.

Remember a bank or building society will only offer its own options which limits your choice.

You can also use a comparison website to find deals across the market based on your level of deposit and whether you want a fixed or variable rate.

A comparison website will usually let you search for all types of home loans such as for first-time buyers or the best buy-to-let mortgage deals.

This will give you an indication of what is on offer but you will need to do the application yourself.

Some lenders may not be on comparison websites so it is worth searching directly online as well.

Alternatively, a mortgage broker can help search the market more widely and find the most suitable deals for you.

Is it better to get a mortgage from a bank or a broker?

A bank may offer the best mortgage deal for you but shop around before you commit.

This is because a bank adviser will only offer their own products.

Limiting yourself to one bank's products could mean you end up paying more than you needed to or you may not even meet their criteria.

Alternatively, a broker can use their market knowledge to help decide which type of mortgage and lender is best for you.

This could be of benefit if you are self-employed or have a poor credit rating as they may have more experience dealing with these sorts of applications.

It saves time on doing multiple applications, as you just tell your broker your income and expenses and they will work out the best mortgage you can get.

They can usually help with your application and will fight your corner to get you approved.

A broker will be able to advise on a range of products from different lenders, but these may also be limited to a panel so you should check if they are tied or work across the whole market.

There may, however, be extra fees when using a broker.

A mortgage may have an application or product fee but a bank adviser won't charge anything on top of that.

In contrast, a mortgage broker may have their own fees for their advice.

When should I start looking for a new mortgage deal?

Getting your mortgage prepared when buying your first home can make you more attractive to sellers as they can see you have finance in place and are serious about proceeding with a purchase.

It can take a couple of hours or a few days in more complicated cases to get a mortgage in principle.

This gives you an idea of how much you can borrow, and you can usually get a decision within hours or a few days in more complicated cases.

You can do a full application once you have had an offer on a property accepted.

It can take four to six weeks for a mortgage to be approved depending on how much information a lender needs.

A seller will usually wait, once they have accepted your offer, for you to get your mortgage sorted.

But having an idea of what you can borrow in advance will speed up your purchase and ensure you don't miss out on your dream home.

More preparation is needed if you are remortgaging.

A lender will move you onto a more pricey SVR once your mortgage deal comes to an end.

That means you could have been on one of the best mortgage deals and suddenly your monthly repayments will increase.

You should start looking for a new mortgage around three to six months before your deal ends.

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It can take at least two months for a remortgage to complete so you need to allow time to find a new deal and make the application.

Mortgage offers typically last up to six months, so you could start early if you spot a good rate and time the start date so you avoid any exit fees and move smoothly onto the new rate once your deal expires.

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