Best UK mortgage deals of the week

File photo dated 09/07/21 of an aerial view of terraced housing and blocks of flats in west London. Chancellor of the Exchequer Jeremy Hunt will deliver his Budget at the House of Commons, London, on Wednesday. Issue date: Wednesday March 6, 2024. PA Photo. See PA story POLITICS Budget. Photo credit should read: Victoria Jones/PA Wire

Average mortgage rates have increased slightly. (PA)

Mortgage rates have stopped their downward trend 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 5.74%, while for a five-year deal, rates came in at 5.29%, according to figures from Uswitch.

The market appears to be hiking prices, 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.

Kellie Steed, Uswitch mortgage expert, said: “Average interest rates have continued to rise this week across the board, with HSBC announcing a hike in all of their rates as of 6th March. Despite this, the Bank of England reported that approvals have risen for the fourth month in a row on home purchase mortgages. They also reported that the ‘effective’ interest rate on new mortgages had fallen to 5.19% in January, from a high of 5.34% in November 2023.

“Whereas this pattern is not duplicated for remortgages, they are at a higher figure this January than in 2023 (30,885 vs 25,819).

“This week the Building Society Association (BSA) have issued a report calling for better mortgage options for first time buyers. They suggest that the cautionary measures introduced post financial crisis (2008) have led to a market that is exclusionary to those wishing to buy their first home.”

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 4.24% for 5 years when the previous week this was at 4.18%. There is a 4.21% deal but it is exclusively for Premier clients.

Read more: UK house prices rise for fifth month running

Looking at the 2-year options, the lowest rate used to be 4.64% but now it’s coming in at 4.68% 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 5.90% 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. 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. However, this week has seen no change.

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. Same as last week.

For the longer five-year fix, the lowest rate comes in at 4.48% with fees costing £998.

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 made changes to its mortgage rates, affecting products across residential purchase and remortgage, as well as its buy-to-let (BTL) mortgage products

The lender used to offer a 4.09% interest rate for five-year deals for prospective homebuyers with a 40% deposit (60% LTV) but this week that has gone up to 4.29%. 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%, higher than last week’s 4.39.

Nationwide mortgage rates

Nationwide (NBS.L) has increased some of its mortgage rates for new borrowers and existing customers.

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%.

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

Halifax mortgage rates

Halifax, owned by Lloyds (LLOY.L), also upped prices and now offers a two-year fixed rate of 4.60% when last it week it was 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 scrapped its 4.18% rate for a the latest 4.28% 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. Santander and Halifax appear 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.

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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