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Best UK mortgage deals of the week

mortgage A terraced row of houses in Bristol, south west England, UK.
Average mortgage rates have increased slightly. (Adam Gasson)

Mortgage rates have stopped their downward trend as some lenders started to slightly increase their fixed rate deals.

The average rate on a two-year fixed deal last week stood at 5.59%, up from 5.55% the previous week, while for a five-year deal, rates came rose to 5.11% from 5.09%, according to figures from Uswitch.

The market appears to be more volatile, with some banks cutting rates further, while others increase their rate 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 fourth consecutive time.

Kellie Steed, Uswitch mortgage expert, said: “The market has returned to a slightly more volatile position following the base rate decision at the beginning of this month. Since the Bank of England decided to hold at 5.25%, some lenders began slightly increasing their fixed-rate deals, largely on the assumption that the static base rate indicated rates staying higher for longer.

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Read more: UK average house price rises by more than £3,000 in 2024

“Since then, swap rates have also begun to rise, meaning more and more lenders have reversed recent rate cuts, as the price of borrowing increased for them. In fact, in the past week we've seen many of the 'big six' mortgage lenders push up their fixed rate deals, with Nationwide also raising their tracker rates by up to 0.25%.”

HSBC mortgage rates

Borrowers can get a 4.39% fixed rate deal for two years at HSBC (HSBA.L) or 3.99% for a five-year deal. 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 5.49% or 4.99% for a five-year fix.

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 4.14% 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 4.54% 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?

In terms of new business, borrowers are seeing a rate increase of up to 0.10% and 0.20% on selected two-year and five-year deals.

For remortgages, rates have gone up to 0.15% and 0.21% on specified two-year and five-year deals.

First-time buyers got hit with hikes of up to 0.10% and 0.11% on selected two-year and five-year deals, while those utilising Help to Buy shared equity for remortgages experienced increases of up to 0.10% and 0.21%.

Santander mortgage rates

Santander ( BNC.L) still offers under 4% mortgage rates despite increasing rates on a raft of deals.

For a £300,000 mortgage with a 40% deposit (£120,000) prospective homeowners can get a 3.94% on a five-year fix.

The same deal under a two-year deal will secure a 4.20% 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 4.68% 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 4.34% with fees costing £995. This is up from 4.25%.

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%.

Nationwide mortgage rates

Nationwide (NBS.L) has increased some of its mortgage rates by up to 0.25 percentage points.

The affected mortgages will include products for new customers and existing customers who are moving home.

First-time buyers and home movers will pay 4.49% interest for a two-year mortgage, while those remortgaging will pay 4.54%.

Read more: The on-trend features luxury property buyers are looking for this year

Nationwide said: “Swap rates, which are a key factor in mortgage pricing, have been rising and as a result we need to increase selected rates to ensure our rates remain sustainable.”

To make things comparable, for the same scenario we’ve been using of £300,000 with a 40% deposit, a two-year fixed rate at Nationwide comes in at 4.54% and at five-years prospective owners are looking at 4.14%.

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

Prospective buyers might be struggling to secure a good deal amid high interest rates and saving up for a deposit. Under 4% deals by Santander (3.94%) or HSBC (3.99%) offer some of the cheapest rates for prospective homeowners, although they require a considerable deposit to secure.

Given that asking prices on newly-listed homes rose in January to £359,748, a 40% deposit equates to almost £150,000.

Also worth noticing that a Dutch lender that offers mortgages with rates that automatically fall as the size of the loan shrinks is introducing more products to the UK.

The company, called April, will offer their loans to first-time buyers with 5% deposits from this spring — having rolled them out for 15% deposits late last year.

On a 15-year fixed term, a borrower could save £5,127 in interest if their LTV fell from 85% to 60% during the term.

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: How much money do I need to buy a house?

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