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Best UK mortgage deals of the week

mortgage Westminster, London, UK. 26th March, 2024. Pretty terraced houses in Maunsel Street, Westminster, London. Property prices are reported to be rising again. Credit: Maureen McLean/Alamy
The Bank of England has kept interest rates at 5.25% in a blow to mortgage holders. (Maureen McLean)

Average mortgage rates are unchanged from the previous week but overall homeowners are still struggling to find a decent mortgage rate.

The average rate on a two-year fixed deal this week stood at 5.74%, while for a five-year deal, rates came in at 5.24%, according to figures from Uswitch.

The market appears to be volatile, as the higher costs providers are paying to fund mortgage lending have pushed many lenders to axe some of the cheaper deals.

This follows the Bank of England’s (BoE) decision to leave UK interest rates on hold at their current 16-year high of 5.25% for a fifth consecutive time.

Uswitch mortgage expert Kellie Steed said: “Another mixed week in terms of lenders mortgage rate decisions. With the bank rate static at 5.25% and swap rates showing some volatility, we’ve again seen some lenders reduce rates and others raise them. As a result, average rates have remained fairly static.

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“Predicting the direction of travel for mortgage rates in the coming weeks is, therefore, fairly difficult. Even Bank of England policymakers don’t seem to be on the same page at the moment. In separate interviews, BoE monetary policy committee member, Catherine Mann, has suggested that financial markets are currently pricing in “too many rate cuts”. On the other hand, BoE governor Andrew Bailey, said it was 'reasonable that markets are taking the view' that there will be two to three base rate cuts later this year.”

HSBC mortgage rates

Borrowers have said goodbye to HSBC’s (HSBA.L) 3.99% for a five-year deal. The cheapest deal on at the lender’s table is now 4.28% for five years.

Looking at the two-year options, the lowest rate comes in at 4.68% and a £999 fee. These deals are unchanged from the previous week.

Both cases assume a 60% loan to value (LTV) mortgage, meaning buyers need to have at least 40% for a deposit.

Read more: Renting now cheaper than owning amid high UK mortgage costs

The lender offers 95% LTV deals, meaning that you only need to save for a 5% deposit. However, the rates are much higher, with a two-year fix coming in at 5.79% or 5.30% for a five-year fix.

This is because the rate someone can get will be determined by their financial situation and the size of their deposit. The larger the deposit, the lower the loan-to-value (LTV), allowing buyers to access better deals because lenders consider them to be less risky.

NatWest mortgage rates

NatWest (NWG.L) has increased some of its mortgage rates and axed its cheapest 3.94% deal.

The best rates prospective borrowers can now get is an online only deal that offers 4.19% for a five-year deal with a £1,495 fee, assuming a 60% LTV. It offers the same rate for green mortgages – this product is only available for properties with an energy performance certificate (EPC) rating of A or B – but the fee here drops to £995.

For a two-year fix, the cheapest a customer can get is 4.64% online, with a product fee of £1495.

Santander mortgage rates

Santander (BNC.L) has also moved away from its under 4% mortgage with a five year fix coming in at 4.24%, assuming you have a 40% deposit.

Read more: Is now the time to move from a variable to a fixed mortgage?

A 60% LTV two-year fixed rate with a £999 purchase fee is priced at 4.65%.

75% LTV three-year fixed rate, for new builds only, with a £999 purchase fee is priced at 4.64%.

Barclays mortgage rates

Barclays (BARC.L) has a five-year deal for prospective homebuyers with a 40% deposit (60% LTV) that comes in at 4.17%. The fee is £899. The bank has a 4.16% rate for the same deal but that is reserved for Premier exclusive clients.

Read more: How hard is it to get on the property ladder?

When it comes to two-year mortgage deals, the lower you can get is 4.54%, same as before.

Nationwide mortgage rates

At Nationwide (NBS.L), five-year purchase fixed rates will start from 4.34% with a £999 fee for borrowers with at least 40% deposit.

Equivalent two-year rates start from 4.69%. No changes from the previous week’s deals.

Halifax mortgage rates

Halifax, the UK’s biggest mortgage lender, has cut selected two and five-year fixed rates for home purchase, remortgage and product transfer.

The lender, owned by Lloyds (LLOY.L), offers a two-year fixed rate of 4.63% with a £999 fee for first-time buyers. No change from the previous week.

The equivalent five-year rate starts from 4.39% (also 60% LTV).

It also offers a 10-year deal with a mortgage rate of 4.93%.

Cheapest mortgage deal on the market

As under 4% mortgage rates are off the market it makes it harder for prospective homeowners to say they’ve secured a good deal.

The 4.17% deal Barclays appears to be one of the cheapest rates available but it requires a 40% deposit, so you will need a hefty amount of cash up front in order to secure the deal.

Given that the average UK house price currently sits at £261,142, a 40% deposit equates to about £105,000.

Borrowers would need to spread their home loans over more than 70 years to be able to afford the same mortgages on offer just two years ago, banks have said.

There is also a new mortgage product that is promising to help first-time buyers get on the property ladder with just a £5,000 deposit.

Read more: Experts warn of 'serious risks' over new 1% mortgage

Yorkshire Building Society is offering a deal that will enable first-time buyers across England, Scotland and Wales with a £5,000 deposit to purchase a property valued at up to £500,000.

It means first-time buyers will be able to potentially get on the ladder with as little as a 1% deposit.

Will mortgage rates go down in 2024?

Mortgage rates have risen substantially as the Bank of England increased the interest rates to a 16-year high in a bid to tackle inflation.

However, the consensus is that interest rates have peaked and that 2024 will see the Bank start to cut rates as inflation eases.

Read more: What is the First Homes scheme and who is eligible?

The BoE's interest rate is currently set at 5.25%. Markets are expecting interest rates to fall to 5% by May, 4.75% in June, 4.5% in August and 4% in November.

If the BoE cuts interest rates as expected, mortgage rates will continue to come down throughout 2024.

About 1.6 million existing borrowers have relatively cheap fixed-rate deals expiring this year.

Watch: Bank of England keeps interest rate at 5.25% but cut moves closer

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