Yahoo Finance Best UK mortgage deals of the week
Mortgage rates come down slightly but prospective homeowners are still struggling as more mortgage providers have increased their rates on new fixed deals, bringing an end to sub-4% offers.
The average rate on a two-year fixed deal this week stood at 5.73%, compared to 5.74% the previous week, while for a five-year deal, rates came in at 5.24%, lower than last week’s 5.29%, according to figures from Uswitch.
The market appears to be volatile, as higher costs faced by providers to fund mortgage lending pushed many to raise rates again in recent days.
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 fourth consecutive time.
Uswitch mortgage expert Kellie Steed said: “With most of the major mortgage lenders raising both their two- and five-year fixed-rate deals ahead of the [interest rate] announcement next week (March 21), it seems that perhaps they’re not confident that we’ll see a reduction in the BoE base rate this time around.
"With the volatility of rates in recent times, NatWest have recently pledged to provide brokers with 24 hours notice of future rate changes where possible. While not a guarantee, and they have stated that rates could still be pulled without prior warning, it’s hoped that this intent is soon echoed by other lenders.”
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 4.24% for 5 years. There is a 4.21% deal but it is exclusively for Premier clients.
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: UK house prices rise for fifth month running
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 5.90% or 5.34% 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, with its cheapest 3.94% deal no longer available but no changes this week.
The best rates prospective borrowers can get is an online only deal that offers 4.24% 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.
Read more: Is now the time to move from a variable to a fixed mortgage?
NatWest is increasing rates for existing customers looking to switch to a new mortgage with the provider. The increases will apply to both homeowners and landlords.
Santander mortgage rates
Santander (BNC.L) has also moved away from its under 4% mortgage offer as it increased rates on a raft of deals. However, this week has seen no change.
For a £300,000 mortgage with a 40% deposit (£120,000) prospective homeowners can get 4.29% on a five-year fix. Last week the same deal was available for 4.17%
The same offer under a two-year deal will secure a 4.69% rate, higher than the previous 4.53%. In both cases, which assumes a 25-year repayment period, there is a £999 product fee.
Skipton mortgage rates
For the same scenario as above, a £300,000 mortgage with a 40% deposit (£120,000) prospective homeowners can get a 5.04% two-year fixed rate with product fees coming in at £1,495 at Skipton BS. Last week this deal came in at 4.89%.
For the longer five-year fix, the lowest rate comes in at 4.69% with fees costing £998, higher than the previous 4.48%.
Read more: How hard is it to get on the property ladder?
Skipton also offers a 100% mortgage for first-time buyers, (or renters who haven’t owned a property in the past three years) and who can demonstrate a 12-month track record of making monthly rental payments. Unlike other 100% mortgage deals, it does not require a guarantor.
Barclays mortgage rates
Barclays (BARC.L) has a five-year deal for prospective homebuyers with a 40% deposit (60% LTV) that comes in at 4.29%, unchanged from last week. The fee is set at £899. The bank has a 4.28% rate for the same deal but that is reserved for Premier Exclusive clients.
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% cash deposit.
Equivalent two-year rates start from 4.69%. No changes from the previous week’s hike.
Halifax mortgage rates
Halifax, owned by Lloyds (LLOY.L), upped prices yet again with fixed rates for first time buyers, large loan, new build and affordable housing mortgages increasing by as much as 0.2 percentage points.
The bank now offers a two-year fixed rate of 4.68% when last it week it was 4.60% with a £999 fee for first-time buyers borrowing the same £180,000 we have used as a scenario above.
For the five-year fix, the lender scrapped its 4.28% rate for a the latest 4.48% deal that would put monthly payments at £968.
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 4.24% deals from HSBC and NatWest appear to be some of the cheapest rates available but you will need a hefty amount of cash to be put up front in order to secure the deal.
Given that the UK house price average currently sits at £263,600, a 40% deposit equates to over £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.
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 will begin 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.
However, sticky inflation is forcing market analysts to reprice their bets, with some saying that cuts will only start in August.
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: Mortgage approvals at highest since October 2022
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