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Best UK mortgage deals of the week

mortgages Housing development in suburban area aerial view
The Bank of England has kept interest rates at 5.25% in a blow to mortgage holders. (Richard Johnson)

Mortgage rates moved higher for a 5-year fix and were unchanged for the 2-year fix but overall homeowners are still struggling as first-time buyers spread their home loans over a longer period to be able to make bills more affordable.

The average rate on a two-year fixed deal this week climbed to 5.74%, compared with 5.69% the previous week, while for a five-year deal, rates came in at 5.24% same as before, 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 fifth consecutive time.

Uswitch mortgage expert Kellie Steed said: “Since the base rate announcement last Thursday, we’ve seen a mixture of both increases and reductions in mortgage interest rates. However, a slightly higher average two-year fixed rate 5.74% vs 5.69% last week, shows that more lenders opted to increase this deal type. Five-year fixed deals, however, are in the same average position as last week (5.24%) despite any shifts in individual lender rates.

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“NatWest, for example, reduced their five-year fixed rate deals shortly after the BoE held the base rate at 5.25%. Interestingly this coincided with the government relinquishing its controlling share in the bank.

“Andrew Bailey, governor of the Bank of England also hinted that rate cuts are “on the way” given that inflation was “moving in the right direction”. He, therefore, felt that it was ‘reasonable’ to surmise that two or three rate cuts may be possible in 2024."

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, higher than last week's 4.24%.

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 4.24% 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.

Santander mortgage rates

Santander (BNC.L) has also moved away from its under 4% mortgage offer but this week it has cut some of its rates.

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

60% LTV two-year fixed rate with a £999 purchase fee is now priced at 4.65%, down from 4.69%.

60% LTV five-year fixed rate with a £999 purchase fee is now priced at 4.24%, down from 4.29%.

75% LTV three-year fixed rate, for new builds only, with a £999 purchase fee is now priced at 4.64%, down from 4.68%.

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%, cheaper than last week's 4.29%. The fee is set at £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% cash deposit.

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

Halifax mortgage rates

Halifax, owned by Lloyds (LLOY.L),offers a two-year fixed rate of 4.68% with a £999 fee for first-time buyers borrowing the same £180,000 we have used as a scenario above. No change from the previous week.

For the five-year fix, the lender has left its 4.48% deal that would put monthly payments at £968 unchanged from last week.

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 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.

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 will begin to cut rates as inflation eases.

Bank of England governor Andrew Bailey said: "In recent weeks we’ve seen further encouraging signs that inflation is coming down.

"We’ve held rates again today at 5.25% because we need to be sure that inflation will fall back to our 2% target and stay there.We’re not yet at the point where we can cut interest rates, but things are moving in the right direction."

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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