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Best UK mortgage deals of the week

Facade of Georgian residential town houses made in yellow and red brick in a luxury residential area of West London.
The Bank of England has kept interest rates at 5.25% in a blow to mortgage holders. (Nicola Ferrari via Getty Images)

Average mortgage rates are unchanged from the previous week but overall homeowners are still struggling to find a decent mortgage rate.

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 5.24%, according to figures from Uswitch.

The market appears to be volatile, as the higher costs providers are paying to fund mortgage lending have pushed many lenders to axe some of the cheaper 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 fifth consecutive time.

Uswitch mortgage expert Kellie Steed said: “This week we’ve seen very little movement in the average fixed rates across both two-year fixed and five-year fixed rate deals among both residential and buy-to-let mortgages. This is despite some lenders having increased their rates slightly.

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“The average Standard Variable Rate (SVR) remains high, at 8.54%, so if you’re coming to the end of your current fix, it’s absolutely worth speaking to a broker now. Big six lender, HSBC, has announced that they will be cutting a number of their fixed rate deals this morning, which may stir the already growing competition in the market.

“In fact, we’ve seen an increase in the number of mortgage deals available on the market overall this week, with the total number of products available now at the highest in 16 years. There has also been an increase in the number of deals available at 90% LTV and above, continuing a general trend of lenders showing slightly less cautious lending practices.”

HSBC mortgage rates

Borrowers have long 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 4.24% for five years.

Looking at the two-year options, the lowest rate comes in at 4.63% and a £999 fee. These deals are both slightly cheaper 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 with a five year fix coming in at 4.24%, assuming you have a 40% deposit.

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

A 60% LTV two-year fixed rate with a £999 purchase fee is priced at 4.65%.

75% LTV two-year fixed rate, with a £999 purchase fee is priced at 4.73%.

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%. The fee is £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% deposit.

Assuming a £300,000 house where you need to borrow £180,000, this would put monthly payments at £984.22 and the cost of the deal at £38,355.

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

Halifax mortgage rates

Halifax, the UK’s biggest mortgage lender, has kept deals unchanged this week after lowering some offers at the start of April.

The lender, owned by Lloyds (LLOY.L), offers a two-year fixed rate of 4.63% with a £999 fee for first-time buyers. No change from the previous week.

The equivalent five-year rate starts from 4.39% (also 60% LTV).

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 it requires a 40% deposit, so you will need a hefty amount of cash up front in order to secure the deal.

Given that the average UK house price currently sits at £261,142, a 40% deposit equates to about £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 start 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.

If the BoE cuts interest rates as expected, mortgage rates will continue to come down throughout 2024.

However, Megan Greene, an external member of the monetary policy committee, said there is a greater threat of inflation persistence in Britain than in the US, where prices rose faster than expected in the year to March.

She said: "There has been encouraging news on UK wage growth and services inflation in recent months. The risk of inflation persistence is diminishing as these indicators come down in line with the MPC’s forecast. But they remain higher than in other advanced economies, particularly the US.

"Momentum in the markets has been towards pricing in later rate cuts by the Fed as economic growth remains robust. In my view, rate cuts in the UK should still be a way off as well."

About 1.6 million existing borrowers have relatively cheap fixed-rate deals expiring this year.

Watch: Homeowners 'should start feeling positive' about selling their property, UK's largest building society says

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