Yahoo Finance Best UK mortgage deals of the week
Mortgage rates have stopped their downward trend as more mortgage providers increase their rates on new fixed deals and bring an end to the sub-4% offers.
The average rate on a two-year fixed deal last week stood at 5.66%, while for a five-year deal, rates came in at 5.11%, according to figures from Uswitch.
The market appears to be more volatile, as higher costs faced by providers to fund mortgage lending pushing 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.
Kellie Steed, Uswitch mortgage expert, said: “Since the base rate decision at the beginning of the month, we’ve seen a number of lenders repricing their fixed-rate products, with the vast majority choosing to slightly raise rates for the time being.
“Average 2 and 5 year fixed rates have edged up over the past week, with none of the big six currently offering the sub 4% deals that were seen in January. However, Halifax chose to go against their competitors, instead choosing to cut some of their fixed products.
HSBC mortgage rates
Borrowers can now say goodbye to HSBC’s (HSBA.L) 3.99% for a five-year deal. The cheapest deal on at the lender’s table is now 4.18% for 5 years. There is a 4.15% deal but it is exclusive for Premier clients.
Read more: House sales see 15% uptick as property market rebounds
Looking at the 2-year options, the lowest rate comes in at 4.64% and a £999 fee.
Both cases assume a 60% loan to value (LTV) mortgage, meaning buyers need to have at least 40% for a deposit.
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 5.24% 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.
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. This is higher than the previous 4.44%.
Read more: Is now the time to move from a variable to a fixed mortgage?
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.
For a £300,000 mortgage with a 40% deposit (£120,000) prospective homeowners can get 4.17% on a five-year fix.
The same deal under a two-year deal will secure a 4.53% rate. 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 4.89% two-year fixed rate with product fees coming in at £1,495 at Skipton BS.
For the longer five-year fix, the lowest rate comes in at 4.48% with fees costing £998. This is up from 4.34% the week before and £2 more for fees.
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) is offering a 4.09% interest rate for five-year deals for prospective homebuyers with a 40% deposit (60% LTV). The fee is set at £899. The bank has a 4.08% rate for the same deal but that is reserved for Premier Exclusive clients.
When it comes to two-year mortgage deals, the cheapest you can get is 4.39%, unchanged from last week.
Nationwide mortgage rates
Nationwide (NBS.L) has increased some of its mortgage rates for new borrowers and existing customers.
Rates for home purchase, including for first-time buyers, are set to rise by up to 0.2 percentage points. Five-year purchase fixed rates will start from 4.19% with a £999 fee for borrowers with at least 40% cash deposit.
Equivalent three-year rates start from 4.54% and two-year deals from 4.64%.
Read more: The on-trend features luxury property buyers are looking for this year
Halifax mortgage rates
Halifax, owned by Lloyds (LLOY.L), offers a two-year fixed rate of 4.42% 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 has a 4.18% rate 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. Barclays appears to have 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.
Also worth noticing that a there have been more reports that a government-backed 99% mortgage will be launched next month.
“The treasury are currently drawing up plans ahead of the budget, and impending election, to help prospective homeowners get onto the property ladder with just 1% deposit,” Steed said.
“This is likely intended to replace the Help to Buy scheme, which ended in England last year and is due to end in Wales later this year. However, while sidestepping the deposit issue for many, such a scheme would leave buyers at higher risk of negative equity. It’s also unlikely to address the issue of high interest rates, as borrowing at 99% LTV typically comes at a premium,” she added.
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: Nationwide Becomes The Latest Mortgage Lender To Up Home Loan Costs
Download the Yahoo Finance app, available for Apple and Android.
