Yahoo Finance Best UK mortgage deals of the week
Mortgage rates continue to fall, providing some relief to UK households and prospective homebuyers, with deals under 4% now available on the market.
The average rate on a two-year fixed deal this week stood at 5.58% while for a five-year deal, rates came down to 5.09%, according to figures from Uswitch.
The big lenders continued to cut mortgage rates as competition between banks heats up and borrowing costs ease.
The exception to this was Nationwide, as the lender nudged rates up to 0.3 percentage points on selected mortgage products.
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.
Laith Khalaf, head of investment analysis at AJ Bell, said: “Mortgage rates have been dropping back in recent months, providing some much needed respite to beleaguered homeowners.
“This latest decision from the Bank of England might firm up mortgage pricing a bit, but it’s unlikely to have a huge effect. That doesn’t mean there isn’t still a lot of pain in the post this year for mortgage borrowers, as millions will be stepping back through the looking glass from the heady days of near zero interest rates into a much harsher reality.”
HSBC mortgage rates
First time buyers can get a 4.59% fixed rate deal for two-years at HSBC (HSBA.L) or 4.24% 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.
NatWest mortgage rates
NatWest (NWG.L) has an online only deal that offers 3.94% 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 4.44% online, with a product fee of £995.
Santander mortgage rates
Santander (BNC.L) has increased selected residential fixed rates for both purchase and remortgage clients – as well as withdrawing all of its first-time buyer fixed rates with £500 cashback. A 90% loan-to-value (LTV) three-year fixed rate for purchase clients was also withdrawn.
Read more: Is now the time to move from a variable to a fixed mortgage?
For a £300,000 mortgage with a 40% deposit, Santander's two-year fix starts at 4.25%, with £999 in fees. For the longer five-year fix, the rate drops to 4.04%.
Skipton mortgage rates
Skipton Building Society has reduced rates across its residential existing and new customer range.
Using 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.
For the longer five-year fix, the lowest rate comes in at 4.25% with fees costing £995.
Barclays mortgage rates
Barclays (BARC.L) is offering a 4.09% interest rate for two-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.
Read more: How hard is it to get on the property ladder?
When it comes to five-year mortgage deals, the cheapest you can get is 4.39% unless you're borrowing over £2m. In that case, the rate drops to 4.32%.
Nationwide mortgage rates
Nationwide (NBS.L) has increased some of its mortgage rates by up to 0.3 percentage points, driving up the cheapest deals on the market.
The affected mortgages will include products for new customers and existing customers who are moving home.
Its two-year remortgage rate will now start from 4.45% with a £1,499 fee, and the five-year equivalent deal will start from 3.94% . Both are at 60% loan to value,
First-time buyer deals at 90% loan to value are now from 5% for a two-year fixed rate or 4.55% over five-years, both with a £999 fee.
Its five-year 95% loan to value fee-free first-time buyer deal is at 5.14%.
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 4.3% and at five-years prospective owners are looking at 4.07%.
Halifax mortgage rates
Halifax currently offers a two-year fixed rate up to 60% loan-to-value (LTV) at 4.27%, as well as a two-year fixed rate up to 85% LTV at 4.57%.
The lender also introduced a five-year fixed rate up to 80% LTV at 4.18%, and a five-year fixed rate from 90% to 95% LTV at 5%.
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. NatWest with its under 4% deals appears to 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.
Will mortgage rates go down in 2024?
Mortgage rates have risen substantially as the Bank of England (BoE) 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.
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.
Read more: UK house prices rise in January as pressures on mortgage rates ease
However, a surprise increase in inflation is forcing market analysts to reprice their bets, with some saying that cuts will only start in August.
If the Bank of England 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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