Best UK mortgage deals of the week

Mortgage rates have gone up compared to last week as future homeowners struggle to find a decent price.

The average rate on a two-year fixed deal this week stood at 5.89%, higher than the previous 5.79%, while rates for a five-year deal came in at 5.34%, above last week's 5.31%, according to figures from Uswitch.

Anxiety has set in among UK mortgage lenders, with rates being hiked left, right and centre, amid uncertainty about how the Bank of England's (BoE) interest rate path will play out.

With just two Bank of England cuts now expected in 2024, several lenders have recently raised rates – adding to pressure on homebuyers and those looking to remortgage.

This follows the BoE’s decision to leave UK interest rates on hold at their current 16-year high of 5.25% for a fifth consecutive time.

Buyers have become cautious amid rising mortgage rates, which has led a slump in house prices last month.

Ranald Mitchell, director at Charwin Private Clients, said: “Buyers are behaving cautiously at the moment so the fall in prices in April comes as no surprise.

“The ebullience at the start of the year has been slowly eroded as mortgage rates have edged up.”

HSBC mortgage rates

Borrowers have long said goodbye to HSBC’s (HSBA.L) 3.99% for a five-year deal. The cheapest deal at the lender’s table is now 4.48% for five years.

Looking at the two-year options, the lowest rate comes in at 4.83% with a £999 fee. Same as 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 lowered some of its mortgage rates but no offer comes close to its previous 3.94% deal.

The best rates prospective borrowers can now get is an online only deal that offers 4.40% 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 4.77% online, with a product fee of £1,495.

Just last week the same deals came in at a lower rate: 4.19% for five years and 4.64% for two years.

Santander mortgage rates

Santander (BNC.L) has also moved away from its under 4% mortgage with a five year fix coming in at 4.35%, assuming you have a 40% deposit. Last week this deal was on the table for 4.22%.

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 used to be priced at 4.61% but it currently sits at 4.78%.

75% LTV two-year fixed rate, with a £999 purchase fee is priced at 4.83%.

Barclays mortgage rates

Barclays (BARC.L) used to have the cheapest five-year deal for prospective homebuyers with a 40% deposit (60% LTV) that came in at 4.17%, with a £899 fee. No more – the lender has hiked the rate for that deal to the current 4.47%. However, it is unchanged from last week.

When it comes to two-year mortgage deals, the lowest you can get is 4.84%, which is higher than last week's 4.83%.

Nationwide mortgage rates

At Nationwide (NBS.L), five-year purchase fixed rates will start from 4.59% with a £999 fee for borrowers with at least 40% deposit. Last week this was at 4.34%

Read more: How hard is it to get on the property ladder?

Assuming a £300,000 house where you need to borrow £180,000, this would put monthly payments at £1,009.72 per month.

Equivalent two-year rates start from 4.84%, higher than last week’s 4.69%.

Halifax mortgage rates

Halifax, the UK’s biggest mortgage lender, has lowered some of its deals across a range of mortgages.

The lender, owned by Lloyds (LLOY.L), offers a two-year fixed rate of 4.80% with a £999 fee for first-time buyers. Higher than last week’s 4.60%.

The equivalent five-year rate starts at 4.58% (also 60% LTV), also higher than the previous 4.31%.

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 4.35% deal Santander offers 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. NatWest's 4.40% offer also isn't that far off.

Read more: Which first-time home buyer scheme is right for me?

Given that the average UK house price currently sits at £261,962, 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.

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.

Until now, the consensus was that interest rates have peaked and that 2024 will see the Bank start to cut rates as inflation eases.

However, inflation slowed down less than expected, pushing City investors to cut their forecasts for how much the Bank of England will cut interest rates this year. Traders are now pricing in just two interest rate cut this year, compared to expectations of five cuts at the start of 2024.

If the BoE only makes any cuts this year, mortgage rates will come down but not as much as originally expected for 2024.

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

Watch: Liz Truss refuses to accept blame for mortgage crisis after her mini-budget

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