21 February: Competition Keeps Fixed Rates Keen
Mortgage experts say sub-4% fixed rate deals aren’t about to disappear, despite the recent spike for lenders in the cost of providing fixed rates to customers, writes Jo Thornhill.
Wholesale ‘swap’ rates – the interest rates at which banks lend to each other – have been moving a lot in recent days. This is the rate at which mortgage lenders must borrow the money to then lend out to their mortgage customers.
Lenders add their own margin on top, so when swap rates rise, so too do the mortgage rates homeowners pay.
The recent rise in swap rates is one of the reasons behind Virgin Money’s increase to fixed remortgage rates yesterday (see story below). But despite the move – which bucks the trend of the past month, which has seen fixed mortgage rates fall across the market – brokers are confident that intense competition will keep mortgage prices low.
Virgin has kept its five-year fixed rate at under 4%. Other lenders including First Direct, Halifax, Nationwide, NatWest, Santander and Yorkshire building society, all have five-year and 10-year fixed rate deals priced below the Bank of England Bank Rate (4%).
Yesterday Platform, part of Co-operative Bank, launched a market-leading five-year fix at 3.75%, although this is only available at 60% LTV with a steep £1,999 fee and it is for a minimum mortgage size of £400,000.
Broker-only lender Platform is offering other five-year fixed rate options from 3.85% (60% LTV) with a £1,499 fee or at 3.89% with a £999 fee, for example.
Tessa Skot, chief operating officer at online broker Better.co.uk, said: ‘There’s no cause for panic – not all lenders are looking to make similar adjustments to Virgin Money.
“Virgin is likely being more conservative than other lenders in reaction to swap rate movement, and is also looking to maintain prompt service levels in response to increased customer demand.
“We often see that, when a lender has received a high volume of applications, they temporarily increase rates for new applications to help maintain the service levels customers expect on the applications they have already received. When these applications have been processed, a lender often then lowers interest rates again.
Mark Harris, chief executive of mortgage broker SPF Private Clients, has this advice for borrowers looking for a new deal: “While the general trend for fixed-rate mortgages has been down over the past few weeks, we expect to see pricing go up and down over the next six months with no visible trend.
“Borrowers may be tempted to wait for rates to fall but there is a danger they might not. A potential option would be a base-rate tracker mortgage with no early repayment charges, enabling you to move onto a fixed rate should pricing come down further.
“Another option could be to take a two-year fixed-rate mortgage with a view to taking a longer-term fix when that comes to an end, in the hope that they may then be cheaper.”
Figures released today by HM Revenue and Customs also highlight how higher mortgage rates are taking their toll on the housing market.
Data for stamp duty receipts show there were 77,390 residential property sales in January – a fall of 7% annually and down 27% since December 2022. For non-residential sales there were 8,500 transactions – an 11% annual fall, or a drop of 3% month on month.
Gareth Lewis, commercial director of property lender MT Finance, says: “Volumes are relatively similar to pre-pandemic levels which is encouraging. But on the other hand, transaction levels are nowhere near where they need to be.
“We still need to find a way to stimulate the market and enable more people to buy property, as many are struggling with affordability. There isn’t an easy solution but something has to be done to enable more to get onto the first rung of the ladder.
“It makes sense that January’s transactions would be down on December’s and in the coming months, we expect to see more of a downward trend.”
20 February: Virgin Increases Cost Of Remortgage Deals
Virgin Money has increased rates across its fixed-rate remortgage range by up to 0.25 percentage points, as costs fall across the wider mortgage market, writes Jo Thornhill.
From 8pm this evening, Virgin’s two-year fixed rates will rise by 0.2 percentage points to 4.79% (65% Loan to Value) and 4.89% (75% LTV). Neither deal charges an arrangement fee.
Virgin’s three-year fixed rate will increase by a steeper 0.25 percentage points to 4.59% (75% LTV).
The lender’s five-year fixed rate will also be nudged upwards by 0.04 percentage points to 3.99% (65% LTV), with a £995 fee.
However, Virgin still remains among a small group of lenders offering five-year fixed rates at under 4%. They include First Direct, HSBC, Santander and Yorkshire building society.
20 February: Five-Year Fix Available Below 4%
Santander has cut its fixed mortgage rates and is offering a five-year fixed rate deal at 3.99%, joining a glut of other lenders to bring five-year fixes down under 4%, writes Jo Thornhill.
Its five-year fixed rate at 60% LTV, available from tomorrow, has a £999 fee. The new rate represents a 0.19 percentage point cut by Santander on its previous five-year fixed deal, which was itself launched earlier this month.
Other lenders, including HSBC, Virgin Money and the Nationwide and Yorkshire building societies are already offering five-year fixed rates at 3.99% (see stories below).
Santander is also cutting other fixed residential mortgage rates by up to 0.5 percentage points and buy-to-let rates by up to 0.3 percentage points, from tomorrow.
It is offering a fee-free two-year fix at 75% LTV from 4.79% for residential borrowers. It has a two-year fix at 5.59% for remortgage buy-to-let customers at 75% LTV, with no fee.
Other lenders to cut rates include:
- Landbay: specialist buy-to-let lender Landbay has cut rates on mortgages for landlords of multiple occupation properties and multi-unit freehold blocks by up to 0.3 percentage points. For standard buy-to-let properties rates have been cut by up to 0.15 percentage points. Two-year fixed rates start from 5.29% with a two per cent fee or from 4.79% with a three per cent fee
- Foundation Home Loans: Foundation has cut rates across residential and buy-to-let mortgages by up to 1.5 percentage points. The lender has improved the rate on its owner-occupier Green ABC+ product for properties with an energy performance certificate (EPC) rating of C and above. The new rate is 6.44% down from 7.89%. Buy-to-let rates have been reduced by 1.8 percentage points across its Green product range. The five-year fixed rates, available up to 75% LTV, will start at 6.44% with a 1.25% fee, for example.
15 February: House-Buyers Enjoy Increased Choice Of Loan Deals
Nationwide, the world’s largest building society, is adding more weight to the recent swathe of mortgage rate reductions by lowering the cost of its fixed and tracker deals by up to 0.70 percentage points, writes Laura Howard.
From tomorrow (16 February), starting costs for five-year fixed rate mortgages at Nationwide will be pegged down by 0.19 percentage points to 3.99%.
The move brings it into line with rivals Virgin Money, Yorkshire building society and First Direct, which already offer sub-4% five-year fixes (see stories below).
The newly-priced five-year fix – available with a 40% deposit – comes with a £999 fee, although a fee-free option is available priced at 4.18%.
Reductions are less generous on tracker mortgages, which follow movements in the Bank of England Bank rate (currently 4%). Costs for a two-year deal start at 4.24% with a £999 fee, having been cut by just 0.05 percentage points.
Existing customers at Nationwide looking for a new deal will see reductions of up to 0.41 percentage points, with rates starting from 3.94% for a five-year fix, with a £999 fee.
The lender promises that ‘switchers’ will be offered rates that are the same or lower than the equivalent deal for new customers.
The biggest cost reductions, however, are reserved for first-time buyers, who will see up to 0.70 percentage points knocked off selected two, three and five-year fixes.
From tomorrow, the first-time buyer five-year fix, which requires a deposit of just 5%, will be priced at 4.99% with a £999 fee. The equivalent no-fee deal, which has seen the biggest reduction of 0.7 percentage points, will be priced at 5.09%.
First-timers at Nationwide can continue to choose between £500 cashback or free standard legal fees.
The latest moves are the fourth round of mortgage rate reductions that Nationwide has announced since the start of the year and the ninth since last Autumn’s mini-Budget.
14 February: 3.99% Deal Broadens Range Of Sub Bank Rate Offers
First Direct is cutting fixed mortgage rates across its range by up to 1.05 percentage points. It is also joining the ranks of lenders offering a five-year fix at under 4%, further fuelling competition in this sector of the market, writes Jo Thornhill.
The bank says its five-year fixed rate will be priced at 3.99% after a 0.25 percentage point cut (60% LTV). There is a £490 fee.
Virgin Money, HSBC and Yorkshire building society are offering sub-4% five-year fixes – the first time rates have dipped below 4% since September last year.
First Direct’s 10-year fixed rate has seen the biggest cut of 1.05 percentage points and is now at 4.04% (60% LTV) with a £490 fee. The two-year fixed rate starts at 4.49% (60% LTV), also with a £490 fee. The bank’s mortgages are available to all new and existing customers.
Carl Watchorn, head of mortgages at First Direct, said: “These latest rate reductions are the most significant to be implemented to the First Direct mortgage range since last autumn. Our biggest rate cuts are across our 10-year range as we recognise that many customers will want long-term peace of mind at the moment.”
- Halifax Intermediaries has cut rates by up to 0.36 percentage points for purchase and remortgage borrowers – effective tomorrow (15 February). It is offering, through brokers, a 10-year fixed rate at 3.99% (60% LTV) with a £999 fee. The same deal is 4.04% at 75% LTV.
- Barclays has cut its two- and five-year fixed rate mortgages by up to 0.44 percentage points for residential and buy-to-let customers. It is offering a two-year fixed-rate at 4.3% (60% LTV) with a £999 fee – or at 4.75% at 75% LTV – both are residential rates. It has introduced a five-year fixed-rate for buy-to-let borrowers at 4.75% (75% LTV) with a £1795 fee. The bank has also said it is withdrawing its help-to-buy mortgage range from tomorrow (15 February)
- Accord, the specialist lending arm of Yorkshire building society, has cut fixed rates for buy-to-let (BTL) borrowers by up to 0.24 percentage points, effective from tomorrow (15 February). It is offering a five-year fix at 5% (65% LTV) with a £495 fee. It has a two-year fix for house purchase at 5.84% (75% LTV) with no fee and £500 cashback. The fee-free two-year fix for remortgage is now 5.71% (75% LTV).
13 February: Move Comes As Lenders Continue To Cut Rates
From next month, NatWest will allow mortgage customers to make overpayments of up to 20% of the outstanding balance per year – the previous maximum was 10%, writes Jo Thornhill.
Most lenders allow borrowers to make penalty-free overpayments each year of up to 10%.
NatWest says that, for customers making lump sum overpayments in excess of £1,000, this will mean their monthly mortgage repayment will be recalculated. This will reduce monthly mortgage repayments afterwards – so effectively the benefit of the overpayment is calculated immediately.
For those making overpayments less than this amount, their repayments won’t change, but it will mean they’ll have a lower balance to refinance when it comes to a new fixed term deal.
The bank has said it will write to customers who have a regular monthly overpayment of more than £500 a month (or more than 8% per year) to let them know about the increase to its overpayment allowances.
Mark Harris at broker SPF Private Clients said: ‘NatWest joins a handful of lenders which allow 20% overpayments, including Metro Bank and Atom Bank. Suffolk Building Society will even allow up to 50 per cent overpayments without penalty.
“But given household incomes are so under pressure at the moment, it is hard to see whether many borrowers will be able to take advantage of these increased limits, even if they wanted to. For most, 10% overpayments are more than enough.
“Research by Lifesearch estimated that only 7% [of borrowers] overpaid on their mortgage during the first half of 2021. But anecdotally overpayments are rarely made to their maximum capacity. With this in mind, it’s unlikely that other lenders will follow suit.”
Mortgage rates have also continued to fall across the market as lenders jostle for business. The latest providers to make changes include:
- TSB reducing fixed rates for purchase and remortgage customers by up to 0.65 percentage points. Its two-year fix at 60% LTV is now 4.54% with a £995 fee. At 85% LTV the rate is 5.34% and at 95% LTV it is 5.84%
- The Mortgage Lender cutting fixed residential rates by up to 0.66 percentage points and buy-to-let rates across its range (fixed and tracker rate deals) by up to 0.9 percentage points.
- MPowered Mortgages cutting fixed rates by up to 0.7 percentage points. It is offering a three-year fixed rate at 4.36% from 60% LTV. Its 10-year fix is now 4.29% at 60% LTV. It follows a rate cut of up to 0.31 percentage points earlier this month.
In further relief for mortgage borrowers, Moneyfacts has reported the number of mortgage deals available has increased to 4,341 – up from 3,643 last month.
The latest product count sits above 4,000 for the first time since August 2022, a positive sign of stability returning to the market after product choice plummeting after the mini-Budget in September last year.
The average shelf life of mortgage deals also increased to 28 days, the joint highest since March 2022, and a significant improvement on the 15 days seen last month.
10 February: Santander Joins Trend To Chop Fixed Rate Deals
Santander and the Yorkshire and Skipton building societies are among a slew of lenders to have cut fixed mortgage rates in recent days, writes Jo Thornhill.
A round-up of the latest rate changes includes:
- Santander: fixed rates have been cut by up to 0.24 percentage points for purchase, remortgage and new build mortgages. The new five-year fixed rate for purchases is now 4.22% at 60% LTV with a £999 fee. The rate at 95% LTV is now 5.64% with no fee
- Yorkshire building society: fixed rates cut by up to 0.25%. It is offering a five-year fix at 3.98% at 75% LTV for remortgage customers. There is a £1,495 fee. The five-year fix for home purchase customers is 4.09%. The lender’s five-year fixed rate at 90% LTV is now 4.77% with no fee and £1,000 cashback
- Skipton building society: fixed rates have been cut by 0.13 percentage points for high LTV deals. Its five-year fix for remortgage customers at 80% LTV is now 4.54%. For borrowers at 85% LTV the rate is 4.57%. Both deals have a £995 fee and £250 cashback. Two year fixed rates at 85% LTV are now 4.89% with a £995 fee
- MPowered Mortgages: fixed rates cut by up to 0.31 percentage points for homebuyers and remortgage borrowers over two and five year terms. Two-year fixed rates start from 4.54% for home purchase and 4.39% for remortgage – both have a £1,999 fee, although remortgage customers get £500 cashback on completion. Fee-free versions start at 4.94%. Five-year fixed rates are 4.13% for remortgage and 4.14% for purchases
- Bluestone Mortgages: specialist lender Bluestone, which focuses on non standard mortgage applications, has cut fixed rates on its residential and buy-to-let mortgage ranges by up to 0.7 percentage points
- Hampshire Trust Bank: the rate on specialist lender HTB’s five-year fixed professional landlord mortgage has been cut by 1.3 percentage points to 5.99%. Two-year rates start from 5.69%
- Coventry building society: fixed rates have been cut by up to 0.19 percentage points for purchase and remortgage customers. It is offering a five-year fix at 4.16% at 65% LTV with a £999 fee. The two-year fix is 4.37% at 65% LTV – also with a £999 fee
- Metro Bank: fixed rates have been cut across residential and buy-to-let mortgages. For residential customers two-year fixed rates at 60% LTV start from 4.99% or from 5.39% at 75% LTV. Three-year fixed rates have been launched starting at 4.39% at 60% LTV.
Ben Merritt, director of mortgages at Yorkshire Building Society, said: “We’re actively monitoring market developments and are committed to taking every possible opportunity to pass on savings to help people reduce what is, for most, their biggest monthly outgoing.”
8 February: Virgin Joins HSBC With Sub-Bank Rate 5-Year Deals
Virgin Money has slashed its mortgage rates by up to 0.51 percentage points and launched a sub-4% five-year fixed rate, while Dudley building society and Together have also trimmed rates down, writes Jo Thornhill.
Yesterday, HSBC announced a sub-4% five-year remortgage fix, dipping below the current Bank rate set by the Bank of England (see story below).
As the mortgage rates war continues apace, here are the latest changes:
- Virgin Money has cut fixed rates across its range. It is offering a broker-only remortgage five-year fixed rate at 3.95% (down 0.25 percentage points) – available at 65% LTV. There is a £995 fee. Its five-year fixed rate for purchase customers is 3.99% (down 0.18 percentage points) at 65% LTV with a £1,495 fee. The fee-free two, three and five year fixed rates for remortgage customers are cut by up to 0.51 percentage points and start from 4.1% at 65% LTV. These are all available through brokers
- Dudley building society has cut rates on fixed and discounted rate deals and revamped its range by adding expat buy-to-let and holiday home mortgages. Among its new offering is a two-year fixed rate for residential mortgages at 5.59% at 90% LTV and it has an expat residential mortgage at 5.89% at 80% LTV
- Together, the specialist lender which offers mortgages to borrowers who might be turned down by mainstream lenders, has cut fixed rates for residential mortgage customers by up to 0.25 percentage points. It is offering a two-year fixed rate at 8.2% and a five-year fix at 7.95%. Its bridging loan rates have been reduced by up to 0.14 percentage points.
Richard Walker, head of intermediary sales at Virgin Money, said: “Many borrowers, including first time buyers, are looking for a longer term product which guarantees a fixed rate and a consistent payment for the term of the product.
“Our new five and 10-year fixed rates at 95% LTV offer exactly that, and mean more aspiring homeowners can get their foot on the housing ladder.
“We’ve also refreshed our range of intermediary exclusives, including a competitive five-year fixed rate starting from 3.95%, as we continue to support many types of customers with their mortgage needs.”
7 February: HSBC Offers 5-Year Deal Below Bank Rate
HSBC has cut its fixed mortgage rates by up to 0.45 percent points and is offering a five-year deal priced below the Bank of England bank rate of 4%, writes Jo Thornhill.
This is the first five-year fixed rate at under 4% since September 2022. The new rate is 3.99% (down from 4.29%) for remortgage customers with at least 40% equity in their home. There is a £999 fee.
It is offering a fee-free five-year fixed rate at 5.19% (down by 0.45 percentage points) for first time buyers with a 5% cash deposit. The equivalent two-year first time buyer fixed rate is now 5.84% (down 0.35 percentage points).
It is HSBC’s third rate cut of the year, which sees reductions across almost every fixed rate mortgage for new and existing residential borrowers. It has also made reductions to buy-to-let mortgage deals of up to 0.3 percentage points.
Nationwide building society has cut fixed rates again – the third time this year. It has cut by up to 0.75 percentage points across its range. It is offering a 10-year fix at 4.34% for first time buyers at 75% LTV and with a £999 fee. Its five-year rate for remortgage customers is 4.49%. This is at 85% LTV and also with a £999 fee.
Broker-only lender Foundation Home Loans has cut rates by up to 0.9 percentage points for residential and buy-to-let mortgages. Its five-year fixed rate deal for owner-occupier borrowers is 6.59%, at 75% LTV with a £1,495 fee. Buy-to-let fixed rates now start from 5.89%.
Sam Amidi, head of mortgages at online broker Better.co.uk, said: “We now expect to see more lenders following HSBC. The price war is in full swing with HSBC taking the big leap of offering sub-4% fixed rates over five-years. This is positive for the consumer and should be an encouraging sign of what the year will hold.”
See related updates below
6 February: Number Of Available Deals Increasing Rapidly
Skipton building society and Gen H Mortgages are the latest lenders to cut fixed mortgage rates, as one online broker reports a record month for home loan enquiries, writes Jo Thornhill.
- Skipton building society has cut its fixed rates by up to 0.18 percentage points. It follows a cut of up to 0.42 percentage points to fixed mortgage rates last month. Its five-year fix at 90% LTV is now 4.6%. This deal is for remortgage customers and has a £995 fee, with £250 cashback on completion (rates are effective from 7 February). The five-year fix for purchase at 90% LTV is 4.83%. This also has a £995 fee with £1,000 cashback. Buy to let borrowers can get a two-year fixed rate at 5.3% (75% LTV with a £995 fee).
- Generation Home (Gen H Mortgages) has cut its fixed rate mortgage range by up to 0.42 percentage points. Its fee-free five year fix is 4.57% at 75% LTV. The rate falls to 4.52% for borrowers who opt to pay a £999 arrangement fee. The fee-free five year fixed rate at 80% LTV is 4.63% – or 4.61% with a £999 fee.
The number of available mortgage deals increased last month. There are around 4,350 residential mortgage deals on the market, according to Moneyfacts, compared to 3,640 at the start of the year and just 2,560 since last Autumn’s mini-Budget. But it is still a lot lower than the 5,300 deals available in December 2021.
2 February: Bank Rate Increase To 4% Expected But Still Painful
Mortgage borrowers on tracker and standard variable rate deals are set to see their monthly repayments rise after the Bank of England today increased the Bank Rate by 0.5 percentage points from 3.5% to 4%, writes Jo Thornhill.
A homeowner with a £200,000 repayment tracker mortgage over 25 years will see their monthly payment rise by around £50 from £1,052 per month to £1,108. This is assuming a competitive tracker rate of 0.47 percentage points above the Bank Rate.
A similar borrower paying the market average standard variable rate (currently 6.7% according to our online broker partner Better.co.uk) will pay £63 more per month from £1,376 to £1,439 – if their lender increases its SVR by the full 0.5 percentage points.
It is the 10th increase to interest rates since December 2021, and Bank Rate is now at its highest level in 15 years.
An estimated two million homeowners are on variable rate deals. A borrower with a £200,000 repayment mortgage, who has been on their lender’s standard variable rate during the past 12 months, could be paying up to £450 a month more in mortgage costs now compared to December 2021 – when the base rate was 0.1%, seeing their monthly bill go from £994 in 2021 to around £1,450 now.
While competitive fixed mortgage rates have been falling in recent weeks, today’s Bank rate rise is likely to further dampen activity in the already subdued housing market.
The rate of annual house price growth slowed from 2.8% in December 2022 to 1.1% in January 2023, according to Nationwide Building Society’s latest house price index. Prices fell 0.6% month on month and are now 3.2% below where they stood in August 2022.
Avinav Nigam at real estate investment platform, IMMO, says: ‘Rising interest rates have major consequences for the housing market. There is an immediate increase in the cost of mortgages for borrowers on variable-rate mortgages, which could mean an increase in the supply of properties for sale, with negotiating power shifting to buyers.
“Higher interest rates alongside labour and material price inflation mean that building new homes is getting harder and more expensive. Many projects are being paused, reducing future supply.”
Alex Lyle, director of London estate agency Antony Roberts, says: “Given that it’s the 10th rate rise in a row and we are already working with a smaller pool of buyers, this latest rate rise will not be helpful to the market.’
The regulator, the FCA, recently published guidance for lenders around forbearance and how they can help mortgage borrowers who are struggling. It came as it released figures estimating around 750,000 households are at risk of mortgage default over the next two years due to rising interest rates and escalating costs.
1 February: Competition Prompts Cuts To Attract Borrowers
Aldermore has cut mortgage rates for residential and buy-to-let borrowers by up to 0.97 percentage points. It is the second time the lender has reduced rates this year, writes Jo Thornhill.
The bank has announced the launch of a limited run of fixed rate owner-occupied and buy-to-let mortgages and is offering a two-year fixed rate at 5.49% at 75% LTV with no fee. The same fixed interest rate is also available over five years, also at 75% LTV with no fee. These deals are for owner-occupied mortgages.
For buy-to-let borrowers, Aldermore has a five-year fixed rate at 5.54% at 75% LTV, and with a 1.5% fee. Multi-property investors and company landlords can get a five-year fixed rate at 5.44% (also 75% LTV) with a 1.5% fee.
Yesterday, NatWest and Virgin Money announced cuts to their mortgage rates:
- NatWest has reduced rates on its residential mortgage deals by up to 0.24 percentage points and by up to 0.12 percentage points for buy to let borrowers. It is offering a two-year fixed rate deal for residential purchase customers at 4.93% – this deal is at 60% LTV and has no fees. It has a fee-free five-year fix for purchases at 4.68% at 85% LTV. Remortgage deals see the biggest cuts. The two-year fixed rate is cut by 0.24 percentage points to 4.88% – at 75% LTV. There is a £995 fee. At the same time buy to let deals have been cut by 0.12 percentage points. The lender is offering a five-year fixed rate for remortgage or purchase customers at 5.1% – this is at 75% LTV with a £1,495 fee.
- Virgin Money has cut rates on purchase, remortgage and buy to let loans by up to 0.2 percentage points. It is the lender’s second rate cut in as many weeks. It is offering a five-year fixed rate for purchase customers at 4.17% at 65% LTV. There is a £1,495 fee. It has a 10-year remortgage fixed rate at 3.99% at 75% LTV with a £995 fee. Its buy to let remortgage five-year fixed rate is 4.59% at 50% LTV with a £3,995 fee.
See related stories below
31 January: BoE Sees Approvals Slump In 2022
Mortgage approvals have slumped to their lowest level since May 2020, according to the latest data from the Bank of England’s Money and Credit Report, writes Jo Thornhill.
Loans for house purchase fell to 35,000 in December last year – down from 46,000 in November. It was the fourth consecutive monthly fall in approvals.
Once figures from the initial onset of the Covid-19 pandemic and the period immediately after are excluded, house purchase approvals are now at their lowest level since January 2009, when the number was 32,400.
The total value of new approvals fell to just £8.1 billion last month, down from £10.2 billion in November. The six-month average for monthly mortgage approvals is 62,180 with a value of £14.1 billion.
Approvals for remortgaging (with a different lender) fell to 26,100 in December last year, down from 32,600 in November – the lowest level seen since January 2013 (25,800). In terms of value, there was a month-on-month decline from £6.9 billion to £5.6 billion.
Again, the six-month average for remortgages is 45,938 approvals at a value of £9.4 billion.
The main driver behind the slow down in mortgage activity has been the steep increase in mortgage rates. Bank of England figures show the interest rate paid on new mortgages increased by 0.32 percentage points in December to 3.67%.
This is the biggest monthly increase since December 2021, when the recent series of Bank of England Bank Rate increases began.
Figures compiled for Forbes Advisor by online mortgage broker Better.co.uk show that, while fixed rates have steadily fallen over the past three months, they are up to 3.22 percentage points higher than this time last year.
For example, the average two-year fixed rate is now 5.12%, according to Better – this compares to an average of 5.65% in October last year (the highest average in 2022). But average two-year fixed rates were at 1.9% this time last year.
That said, mortgage brokers say there is evidence of stabilisation in the market with continued rate cuts, which should give borrowers greater confidence.
Sam Amidi, Better’s head of mortgages, said:“Given the economic downturn from October, we have naturally seen approvals drop as the consumer considers their next move.
“Historically the Christmas period has been a reflection period for reviewing finances and we have seen a strong response at the start of 2023 with consumer confidence coming back and lenders reducing rates.
“Despite the fact we expect the Base Rate to increase on 2 February, lenders are optimistic this will have little impact on the current rates available and, if anything, there will be further competition in the market with lenders competing on pricing.
“This alone should give the consumer more confidence that we’re moving into a period of stability.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “At first sight the numbers are gloomy. This is at least partly down to the average rate on new mortgages continuing to rise significantly. As borrowers will be all too aware, this comes on the back of significant increases in the average rate paid over the previous three months.
“Thankfully, the situation has significantly eased for borrowers. Lenders continue to chip away at fixed-rate mortgage pricing with Virgin Money reducing its five-year fixed rate to 4.17%, it won’t be long before the psychological 4% barrier is breached, making fixes considerably more attractive than they were just a few weeks ago.”
26 January: Fixed Rates Fall At Buy-To-Let Specialist
The Mortgage Works, the buy-to-let lender owned by Nationwide building society, is the latest lender to cut rates across its fixed mortgage range by up to 0.5 percentage points, writes Jo Thornhill.
Its two-year fixed rate loan is now 3.99% (at 65% LTV). The equivalent five-year deal is 4.39%. At 75% LTV two year fixed rates start from 4.29% and five-year rates are from 4.79%. These deals are for purchase or remortgage and all carry a 3% arrangement fee.
Fixed rates for landlords with large portfolios see the biggest (0.5 percentage points) cuts. The fee-free two-year fixed rate (75% LTV) falls from 6.09% to 5.59%.
In contrast, TMW’s tracker mortgage rates have been increased by up to 0.2 percentage points. The no-fee two-year tracker deal is 4.99% (65% LTV).
TMW follows a slew of lenders who have trimmed their fixed rate mortgages down in recent weeks as competition for new business has increased.
Daniel Clinton at The Mortgage Works said: “These latest rate reductions, which are being rolled out across a significant number of products, will see our headline two-year fixed product fall below four per cent and shows that we are doing what we can to support landlords to manage their finances.”
See related stories below
25 January: More Big Names Cut Rates
TSB and Accord, the mortgage brand owned by Yorkshire Building Society, have both cut rates across their mortgage ranges following the market trend for rate cuts in recent weeks, writes Jo Thornhill.
- Accord has tweaked rates down by 0.17 percentage points on its buy-to-let range. The new rates will be available from 27 January. It is offering a five-year fixed rate at 4.97% at 60% LTV for house purchases, although there is a steep £1,995 fee. The deal pays £500 cashback. There is a two-year fix at 4.9% (60% LTV) with the same fee. At 75% LTV rates start at 5.35% for a two-year fix (£1,495 fee and £500 cashback) for remortgage customers or 5.39% over five years with no fee.
- TSB will cut rates by up to 1.8 percentage points on its residential mortgage range from 27 January. It will also cut rates by up to 1.55 percentage points on its shared equity and shared ownership fixed rate mortgage range, and by up to 0.8 percentage points on its buy to let fixed rates. The three-year fixed rates (which have been cut by 1.8 percentage points) will start from 4.64% at 60% LTV with a £995 fee. The five-year fixed rates start from 4.39% (cut by 0.4 percentage points) at 60% LTV with a £995 fee.
23 January: Halifax Joins List Of Lenders Refreshing Loan Offers
More lenders have trimmed mortgage rates as competition for business remains strong, writes Jo Thornhill.
Our round-up of the latest mortgage rate changes includes:
- Halifax rates have been cut by up to 0.2 percentage points and the lender has added three-year fixed rates to its range. Three-year fixed rates start from 4.68% with no fee (60% LTV) or from 4.5% with a £999 fee. The five-year fixed rates start at 4.46% with no fee (60%LTV) or from 4.86% at 90% LTV. There is also a 10-year fixed rate. Rates start from 4.15% for borrowers with 40% deposit or equity in their home.
- Virgin Money lender has slashed rates across its mortgage range by up to 0.59%. Its broker-exclusive deals see some of the biggest cuts with a two-year fixed remortgage deal now priced at 4.6% (65% LTV). Five-year fixed rates start from 4.28% (65% LTV) or 4.7% at 95% LTV, both with a £1,495 fee.
- Landbay, the specialist buy-to-let lender, has cut rates by up to 0.3 percentage points on its five-year fixed rate deals. Rates start from 4.29% at 55% LTV. Landbay charges a percentage-based product fee ranging from 2% to 7%. It is also offering a five-year fixed rate for borrowers at 75% LTV from 5.39% with a 2% fee, or at 4.79% with a 5% fee.
19 January: Fixed Deals Proliferate Around 5% Mark
Mortgage rates continue to nudge down, in welcome news for borrowers, writes Jo Thornhill. Here’s our latest round-up of the changes:
- Nationwide building society has cut mortgage rates (fixed and tracker) for the second time this month, this time by up to 0.2 percentage points, effective from Friday 20 January. It follows a cut of up to 0.6 percentage points across its range on January 6. First time buyers can now get a five-year fixed rate at 4.69% with no fee, at 85% loan to value (this rate has been cut by 0.15%). Remortgage customers can get a two-year tracker deal at 3.84% with a £999 fee at 60% LTV (reduced by 0.2%).
- Skipton building society has cut its two-year and five-year fixed-rate deals by up to 0.42 percentage points. It is now offering a five-year fixed-rate deal at 95% LTV at 5.03% with a £495 fee, available for purchase only, and a two-year fixed rate deal at 60% LTV at 4.75% with a £995 fee and £250 cashback, for purchase and remortgage. The lender has also reintroduced its 85% loan-to-value (LTV) ratio range after withdrawing it last September.
- NatWest has tweaked its rates down by up to 0.1 percentage points on its remortgage range and by up to 0.06 percentage points for existing customers. It follows cuts of up to 0.72 percentage points earlier this month. It has a two-year fixed rate at 5.08% for remortgage customers at 60% LTV. The equivalent five-year fixed rates start from 4.28%.
- MPowered Mortgages, available through brokers, has cut its fixed rate range by up to 0.27 percentage points. Its five-year fixed rate is 4.41% for borrowers at 60% LTV. It has a three-year fixed rate at 4.54% at 60% LTV – both deals have a £999 fee.
- Keystone Property Finance, the specialist buy-to-let lender, has reduced its standard and holiday home fixed-rate mortgage deals by up to 0.2 percentage points. It offers a five-year fixed rate at 5.64% with a 4% arrangement fee or 5.89% with a lower 3% fee. Both products are at 65% LTV.
You can read more about available mortgage rates here.
January 17: Trend Reflects Optimism On Bank Rate Increases
Lenders are continuing to take a knife to their fixed rate mortgage deals as competition returns to the market, writes Jo Thornhill.
A roundup of the latest lenders to reduce rates includes:
- HSBC: Residential mortgage rates cut by up to 0.15 percentage points and buy-to-let deals cut by up to 0.1 percentage points. Among its new offerings is a 90% loan to value five-year fixed rate with no fee and £500 cashback for first-time buyers at 4.94% (a cut of 0.1 percentage points).
- Santander: Reduced fixed rate mortgage deals across the board by up to 0.59 percentage points and tracker deals by up to 0.5 percentage points. It is offering a two-year fix at 4.84% (this has been cut by 0.45 percentage points) for purchase borrowers at 60% LTV, with a £999 fee. The fee-free option (also cut by 0.45 percentage points) is now 5.14%. There is a five-year fix at 90% LTV with no fee at 5.09% (this has been cut by 0.45 percentage points). The same deal with a £999 fee has been lowered by 0.3 percentage points to 4.94%. At 95% LTV, the five-year fix with no fee has been cut by 0.2 percentage points to 5.84%.
- Fleet Mortgages: Broker-only buy-to-let lender Fleet has cut its fixed rates by up to 0.2 percentage points. Five-year fixed rates now start at 5.29% for 65% loan-to-value (LTV) and 5.39% for 75% LTV. A seven-year fixed rate is available at 5.43%.
- Bluestone Mortgages: Rates reduced by up to 0.5 percentage points on all fixed rate residential and buy-to-let mortgages. Rates now start from 7.10% fixed on lending up to 85% LTV.
- Atom Bank, is increasing the offer validity period for its remortgage and purchase products to six months. It has also introduced new rates for its two, three and five-year purchase and remortgage products, with reductions of up to 0.35 percentage points across its entire range. For a 60% LTV, the app-based bank is offering a five-year remortgage fix at 4.34% to 31 May 2026 (£900 fee applies). For purchase home loans and LTVs up to 80%, there is also a no-fee, five-year fix at 4.54% to the same date.
Sam Amidi, head of mortgages at our broker partner Better.co.uk, said: “With [wholesale market] swap rates dropping in recent weeks, we’ve seen more lender confidence in reducing rates.
“Despite the imminent announcement on the Bank rate by the Bank of England in February – with rates expected to increase again – lenders’ confidence in reducing rates is a good indication of where the market is heading. While we don’t expect any significant rate drops, small reductions can make a difference for the consumer.”
13 January: Higher Payments And Deposits Making Ownership More Difficult
Monthly mortgage payments are taking a larger bite out of typical first-time buyer household outgoings, writes Laura Howard.
Monthly mortgage payments now account for 39% of a typical first-time buyer’s take-home pay, compared to the longer-term average of around 30%, according to Nationwide’s Affordability Report, published today.
The findings are based on first-time buyer households with outstanding mortgages at 80% of the property value.
Against a backdrop of nine interest rate rises during 2022, mortgage costs surged after the ill-starred mini-Budget in late September, reaching their highest levels since 2010.
But, while financial conditions have largely since stabilised, mortgage rates have not recovered to levels seen before the mini-Budget, according to Nationwide.
Andrew Harvey, the lender’s senior economist, said: “The biggest change in terms of housing affordability for potential buyers over the past year has been the rise in the cost of servicing the typical mortgage as a result of the increase in mortgage rates.
“This measure is now well above the long run average, at 39% of take-home (net) pay, and close to the levels seen in the run up to the financial crisis.”
Mortgage rates peaked at around 6.5% last October, but have been steadily falling since. According to data from online mortgage broker Better.co.uk, the average cost of a two-year fix now stands at 5.10%, or 4.72% for a five-year fix.
However, rates are higher for small-deposit mortgages most common among first-time buyers.
While house prices have fallen in recent months, raising a deposit also remains a significant barrier to buying a first home, according to Nationwide.
A 20% deposit on a typical first-rung property is now equivalent to 112% of the full-time worker’s pre-tax income – a similar level to a year ago, and only just shy of the all-time high of 117% recorded earlier in 2022.
A separate report from estate agent Hamptons, using the latest government census data, revealed that the number of private renters grew by 1.12m over the last decade – led by the 10% most deprived areas of England and Wales.
Hamptons found that around 23% of households in the poorest 10% of the two nations rent their homes privately – up from 18% a decade ago.
Aneisha Beveridge, Hampton’s head of research, said: “Growth in the private rented sector over the last decade has come on the back of fewer younger people buying their own home, particularly in the less affluent areas.”
12 January: FCA Fears 750,000 Defaults
More than 750,000 households are at risk of defaulting on their mortgages in the next two years, according to the Financial Conduct Authority (FCA), writes Jo Thornhill.
In a letter to the cross-party Treasury Select Committee, Nikhil Rathi, the regulator’s chief executive, said 200,000 households had already fallen behind with their home loan repayments by June 2022.
FCA data and estimates predict a further 570,000 are at risk of ‘mortgage payment shortfall’ over the next two years. This is when more than 30% of a borrower’s gross household income is going towards mortgage payments.
The figures throw the spotlight on the rising cost of living crisis as millions of households face the double whammy of rising interest rates and inflation at levels not seen for 40 years.
It comes just days after the Office for National Statistics reported that 1.4 million households will face higher mortgage payments this year as their fixed rate deals come to an end and they remortgage to a more expensive loan.
In his letter to MPs, Mr Rathi said: “This number [of at-risk borrowers] is sensitive to changes in interest rates, and factored in market interest rate expectations as of 23 September, as well as external forecasts of changes in real incomes between 2020 and 2022.
“Specifically we assumed that all households would experience a 10% fall in their real incomes over this period.
“This does not necessarily mean that those at risk will miss a mortgage payment because some people will be able to reduce their spending or make use of savings to help them meet their mortgage commitments.”
Mr Rathi adds that any borrower who is facing financial difficulty should contact their lender to look at ways to reduce or smooth the increases to their mortgage payments.
He said the FCA is continuing to work with lenders and has published guidance to firms about forbearance and how to help customers who are struggling.
11 January: Lenders Trim Interest Charges To Tempt Borrowers
New mortgage deals have the shortest shelf life ever at just 15 days on average before being withdrawn, according to analysts Moneyfacts. This is the joint lowest amount of time on record, level with October 2022, writes Jo Thornhill.
In comparison, this time last year mortgage deals were available for 28 days on average.
But while this points to increased volatility in the mortgage market, which could cause difficulties for borrowers looking to secure a new deal, fixed mortgage rates are falling.
Our mortgage partner, better.co.uk, reports the average two- and five-year fixed rates have tracked steadily downwards in recent weeks, down to 5.12% and 4.72% respectively, following 13 consecutive months of rises up to November 2022.
Product choice is also showing signs of improvement, following a significant drop in available deals at the end of last year.
There are currently more than 3,600 mortgage deals available, according to Moneyfacts – this compares to the 2.258 on the market in October 2022. But this is still down on the 5,394 deals available in January last year.
Rachel Springall at Moneyfacts said: “As existing mortgage holders weigh up their refinancing plans and others debate their home purchase desires in 2023, the cost of living crisis and inflated interest rates over recent months may well impact borrowers’ intentions of getting a new deal.
“However, it is anticipated that fixed interest rates will fall further in the months to come to entice new business.”
9 January: ONS Says Million-Plus Households Face Dearer Payments
Nearly one-and-a-half million UK households with fixed-rate mortgages face substantially increased borrowing costs when they renew their home loan arrangements this year, according to the UK’s official data provider, Andrew Michael writes.
The Office for National Statistics (ONS) says that 1.4 million mortgage customers, who bought properties with fixed-rate home loans when interest rates were set below 2%, are due to renew their arrangements in 2023.
Mortgage interest rates have jumped appreciably over the past year in light of an extended series of rises in the Bank rate imposed by the Bank of England (BoE) to head off soaring levels of inflation.
The rate, which currently stands at 3.5% – having risen nine times and by 3.4 percentage points since December 2021 – is an important measure that affects both the cost of borrowing, as well as the amount of interest that banks and building societies pay to savers.
Despite the run of Bank rate rises, most borrowers with fixed-rate mortgages have, until now, been insulated from their effects because they have remained within the offer periods for their home loans.
Based on BoE data, however, the ONS estimates that around 353,000 fixed-rate mortgages are due to be renewed between January and March this year. It adds that the number of fixed-rate mortgage deals due to expire during the course of 2023 will then peak at around 371,000 between April and June 2023.
According to Moneyfacts, the average two-year fixed-rate deal stood at 2.38% a year ago, but has increased markedly over the intervening period to 5.79% today.
Sarah Coles, senior personal finance analyst, at Hargreaves Lansdown said: “1.4 million mortgage borrowers are in a fixed-rate deal that’ll set them back an extra £250 a month by the end of the year. They’re coming to the end of fixed-rate deals, most of which feature interest rates under 2%, and face fixing at as much as 6% going forward.”
“It means either paying more for years, or reverting to a sky-high standard variable rate, while they wait for rates to fall.”
Gary Smith, financial planning director at wealth manager Evelyn Partners, said: “Households must be prepared for increased outgoings this year. Remortgaging to substantially higher rates will, for many, be a significant part of that.”
“Those who have deals expiring this year face a difficult choice as to whether to fix again, or risk a variable rate deal. The former could mean locking in at a relatively high interest rate in order to achieve certainty. The latter could mean rising payments in the short-term, but possibly lower payments in the medium-term as benchmark interest rates plateau or even start to come down.”
For those looking for some certainty over repayments, a two-year fix might make more sense. This is because if rates fell in the next year or two, home loan customers could then step on to a better deal.
An added financial danger, however, is that those who are already paying a substantial proportion of their net income in mortgage costs will be stretched by the increased payments on their new deal. In turn, they could be forced into reducing any savings provision they are already making whether in the form of cash deposits, individual savings account, or pension.
“One tactic some will turn to is to negotiate a longer-term mortgage in excess of 25 year, and for many that could take repayments into retirement age for one or both of the borrowers,” Evelyn’s Gary Smith said.
“This can be a reasonable move either if there is a plan to overpay in future years before retirement, or if the borrowers are comfortable that they can continue to repay a mortgage after retiring without significantly impacting their living standard. For some, it could mean putting off retirement to a later date.”
6 January: Respite For Borrowers As Providers Start To Cut Fixed Rates
Competition in the home loan market has started to intensify, as news emerges that several high street lenders are cutting interest rates on their fixed mortgage deals, Jo Thornhill writes.
Nationwide Building Society, TSB and Virgin Money have all announced plans to cut mortgage rates in what will be welcome news for borrowers.
Mortgage brokers say they also expect more lenders to follow suit as stronger competition returns to the mortgage market. The news comes despite big increases to the Bank of England’s base rate during 2022.
The influential bank rate, which affects both borrowers and savers, currently stands at 3.5% having risen nine times since December 2021.
Nationwide has cut its fixed mortgage rates by up to 0.6 percentage points for first-time buyers, home movers and remortgage customers.
Rival high street lender TSB is cutting fixed rates for purchase and remortgage by up to 1.3 percentage points from Monday (9 January).
Elsewhere, Virgin Money has also reduced its fixed rates by up to 0.93 percentage points. The lender has also launched a range of new residential and buy-to-let mortgage deals.
Nationwide, one of the biggest UK lenders, is offering a five-year fixed rate of 4.43% aimed at remortgage borrowers with at least 60% equity in their property. A three-year fix, for borrowers with 20% equity in their home, is priced at 4.99%.
First-time buyers with a 15% cash deposit can secure a two-year fixed rate with Nationwide at 5.09%, or 4.84% over five years.
Sam Amidi, head of mortgages at broker Better, said: “We saw less movement on mortgage rates at the end of 2022 as most lenders had hit their mortgage quota for the year. These latest moves from Nationwide, TSB and Virgin show competition in the market is returning and we expect more lenders will cut rates in the coming weeks.”
4 January: Cocktail Of Factors See Numbers At Lowest Since Pandemic
The number of mortgages approved for house purchases fell to 46,100 in November from 57,900 in October.
It marks the lowest level recorded since June 2020 (40,500) when the property market ground to a halt during the Covid pandemic.
Approvals for remortgaging – as defined by switching to a different lender – plummeted to 32,500 in November from 51,300 in October. This is below the previous six-month average of 48,100.
The figures, from the Bank of England’s latest Money and Credit Report, are evidence of a weakening property market due to rising borrowing costs, falling property prices and the negative after-effects of last September’s mini-Budget under then-Chancellor, Kwasi Kwarteng.
Alice Haine, personal finance analyst at investment platform, Bestinvest, commented: “November’s drop in mortgage approvals and remortgaging is no surprise when you consider the catalogue of challenges facing the property market, with higher borrowing costs, double-digit inflation and falling real wages impacting affordability for both first-time buyers and those looking to refinance.”
The figures also reflect many buyers failing affordability checks or struggling to secure a mortgage at all after a spate of major lenders pulled deals following the mini-Budget, she added.
However, while mortgage approvals fell in November, individual mortgage debt increased to £4.4 billion from £3.6 billion in October, according to the Bank of England.
On the back of nine interest rate rises in 2022, the cost of mortgages also increased. Interest paid on new borrowing rose by 26 basis points to 3.35%, while rates on existing mortgages increased by 9 basis points to 2.38%.
But, while the odds have been against them, mortgaged first-time buyers are still set to make up 53% of the property market in 2022, according to separate research from Yorkshire Building Society – the UK’s eighth largest mortgage lender.
At 370,000, the forecast number of first-time buyers for 2022 will represent the second highest annual total for 14 years.
Nitesh Patel, Yorkshire Building Society’s strategic economist who forecasted the figures, said: “Demand from first-time buyers remains strong, even with house prices being at historic highs for much of the year and the country experiencing such political and economic uncertainty.”
20 December: Support Aimed At First-Time Buyers With 5% Deposit
The government has announced that its Mortgage Guarantee Scheme (MGS) will be extended by a year, until the end of 2023.
Launched in April 2021, the scheme enables first-time buyers to buy a home with a 5% deposit.
With average property values in the UK well above £260,000, many first-time buyers – who make up 85% of all housebuyers – struggle to raise the funds for deposits. The higher the deposit put forward, the more favourable the terms of the mortgage tend to be.
MGS has thus far helped over 24,000 households get onto the property ladder, according to government data.
Under the scheme the government offers mortgage lenders financial guarantees so they can provide mortgages that cover 95% of the purchase price, subject to the usual affordability checks, on a house worth up to £600,000.
John Glen MP, Chief Secretary to the Treasury, said: “Extending this scheme means thousands more families have the chance to benefit, and it supports the market as we navigate through these difficult times.
“To also help people to get onto the property ladder, the government has increased the level where first-time buyers start paying stamp duty from £300,000 to £425,000. Furthermore, first-time buyers can get relief on properties costing up to £625,000, as opposed to £500,000 previously. Both of these measures are time-limited to April 2025.”
Government schemes intended to support home ownership:
- Help to Buy Individual Savings Accounts (Help to Buy ISA): Aimed at first-time buyers, provides a tax-free bonus of up to £3,000.
- Lifetime ISA (LISA): A long-term savings product to support people saving for a first home or to fund later life.
- Shared Ownership: Gives first-time buyers the option to buy a share of their home (between 25% and 75%) and pay rent on the remaining share.
- First Homes: A scheme designed to help local first-time buyers and keyworkers onto the property ladder, by offering homes at a discount of 30% compared to the market price.
8 December: Options Include Reducing Rates Or Extending Term
Mortgage customers concerned about affording their repayments should receive guidance and support from their lender to help them weather the cost of living crisis, according to the Financial Conduct Authority.
The regulator wants banks and building societies to provide tailored support and measures including:
- temporarily reducing the interest rate
- extending the term of the mortgage to lower monthly payments
- switching the loan to an interest-only arrangement, either permanently or for a limited period, again to lower monthly payments.
Each of these tactics comes at a cost. For example, any deferment of interest owed will lead to higher repayments at a future date, while extending the term will increase the total amount paid over the life of the mortgage.
Also, extending the term beyond retirement age may not be possible if the lender calculates that you would not be able to afford repayments at that point.
Interest-only deals (as opposed to standard capital and interest mortgages) work by deferring repayment of the capital debt until the end of the loan period, so they are only available to those who have a credible way of repaying the total amount at the end of the mortgage.
Anyone switching to interest-only terms temporarily would face higher repayments when the short-term arrangement came to an end.
Making changes to your mortgage may also affect your credit file, with prospective lenders in the future being able to see that you took action because of fears of meeting your repayments.
The regulator says anyone worried about being able to afford their mortgage payments should contact their lender as soon as possible. Its rules mean lenders are required to treat customers fairly and give them support tailored to their circumstances.
Sheldon Mills, head of consumers and competition at the FCA, said: “Most borrowers are able to keep up with their mortgage payments and should continue to do so. But if you’re struggling to pay your mortgage, or are worried you might, you don’t need to struggle alone. Your lender has a range of tools available to help, so you should contact them as soon as possible.”
Lenders have until 21 December to respond to the regulator’s latest guidance, which was issued after the government hosted a roundtable discussion on Wednesday with the FCA, lenders and consumer representatives to discuss the impact of the cost of living crisis on the mortgage market.
At the meeting, lenders committed to enabling customers who are up to date with payments to switch to a new competitive mortgage without another affordability test (an assessment of their ability to make repayments).
More information will also be provided to help customers plan ahead when their fixed-rate mortgage deal comes to an end.
The government also confirmed that it will make the Support for Mortgage Interest benefit easier to access. This enables those on Universal Credit to apply for help with mortgage interest payments.
4 November: Bank Rate Expected To Peak At 4.75% This Time In 2023
The Bank of England yesterday increased its Bank rate by 0.75 percentage points to 3% in a bid to stave off steepling levels of inflation, writes Andrew Michael.
It is now at its highest level since 2008. But where will it go next? And what are the implications for borrowers?
The Bank rate is important because it is used by banks, building societies and other financial institutions to determine both lending costs and the returns paid on savings.
Explaining its decision, the Bank pointed to a “very challenging outlook for the UK economy”. It added that it expected “the UK to be in recession for a prolonged period” and warned that consumer price inflation “would remain elevated at levels over 10% in the near term”.
Financial markets reacted to the news by estimating that official interest rates would top out at about 4.75% by next autumn. Many mortgage rates will then be set at a premium to this level.
The Bank’s decision on Thursday will drive up costs straight away for around 2.2 million UK mortgage customers that have taken out variable rate or tracker mortgages. The latter mirror movements in the Bank rate so borrowers will experience an immediate knock-on in terms of their monthly repayments.
However, in comments made after the initial rate-setting announcement, Andrew Bailey, the Bank’s governor, suggested markets had over-exaggerated their predictions for future rate rises. He added that lenders would need to reflect this in their mortgage pricing.
He said: “[The Bank rate] will have to go up by less than currently priced into financial markets. That is important because, for instance, it means that the rates on new fixed-term mortgages should not need to rise as they have done.”
In the period of relative stability since Jeremy Hunt, Chancellor of the Exchequer, reversed most of the decisions made by his predecessor, Kwasi Kwarteng, in his September mini-budget, fixed-rate mortgages have already started to edge down in price.
Following yesterday’s move, Simon Gammon, managing partner at Knight Frank Finance, said he thought that fixed-rate products are likely to remain stable, or perhaps even fall further: “Many fixed-rate products sit somewhere between 5.5% and 6%. Swap rates, instruments used by lenders to price mortgages, have been easing.
“If they continue to do so, we believe that many borrowers could still enjoy fixed-rate products starting with a four.”
Market confidence
Paul Holland, a mortgage broker at Henchurch Lane Financial Services, said: “Fixed rates have already factored in the latest increase so they shouldn’t move any further north. They tend to be based on swap rates, which if anything, are now coming down as some confidence is restored to the market following the U-turn on everything done by Kwasi Kwarteng and Liz Truss.”
Paul Elliott, managing director at broker Propp, said: “The key from a borrower’s perspective is how the swap rate markets react to this increase and the Autumn budget [on 17 November] given that fixed-rate mortgages are still the most popular option for most people.
“But even if fixed-rates drop from the peaks seen in October, we’re still entering a prolonged period of higher rates than most borrowers have been used to for the past 15 years. This will undoubtedly put pressure on affordability and exacerbate the current cost of living crisis for many. Difficult times lie ahead.”
Jon Halbert, mortgage and protection adviser at Key Financial Associates, said: “The latest rate rise potentially kills the [house] purchase market stone dead and is catastrophic for anyone coming out of a fixed rate.
“Anyone who fixed their mortgage last year for longer than 2 years, at less than 2% for some and less than 3% for others, may not need to change their spending habits for now. But for those families whose fixed-rates end in the next few months, this could mean mortgage defaults and even repossession.
“Anyone who has a mortgage with a fixed rate ending within the next six months who is worried about this and the effect it will have on them should speak to a mortgage broker as soon as possible. It has never been more important to be proactive.”
Henchurch Lane’s Paul Holland adds: “Bank rate predictions for the next year are tending to fall somewhere in the 4% to 5% bracket. This is expected to be relatively short-term with a target Bank rate of close to 2.5% over the longer term.
“This means that anyone looking at any kind of new mortgage rate for the next year or so, whether that be on a purchase or a renewal basis, is likely to be paying a fair amount higher than what they’ve been used to for a while now.
“Some conversations we’re having with clients include options around tracker rates, as well as longer mortgage terms and interest-only products, if viable, all of which should go some way to helping reduce the impact in the short term increase.
“Budgeting and planning should be at the forefront of any advice process. It’s time for people to start looking at their situations earlier than normal to ensure they’re not stuck later on.”
27 October: 40% Could Struggle With Mortgage Costs
Higher interest rates could leave up to 40% of homeowners struggling to pay their mortgages next year, according to analysts.
Investment firm Morgan Stanley shared analysis showing that between 35% and 40% of UK mortgages will reach the end of their initial terms over the next 12 months, leaving mortgage holders to negotiate new deals at much higher rates.
The firm predicts mortgage rates of around 6% would overstretch up to 4 in 10 UK households, as rates rise alongside escalating energy bills. Its research found 30% of households with the lowest income make up 5% of the mortgage books.
In the same analysis, as reported by the Financial Times, Morgan Stanley said mortgage affordability could be worse in the next year than it was prior to the global financial crisis.
It noted, however, that the quality of mortgage underwriting is higher now than it was pre-crisis, meaning current borrowers’ applications were more carefully vetted than they were before 2008.
As mortgage holders anticipate painful remortgage rates, experts are advising anyone who can make overpayments to do so now, as it could qualify them for a lower-rate LTV band on their next deal and reduce interest payments in the long term.
Most mortgage lenders allow borrowers to pay up to 10% of the outstanding loan every year penalty-free.
28 September: Fears Over Higher Rates And Fate Of Sterling Hit Loan Availability
Mortgage lenders are pulling deals due to the volatility of sterling on international currency markets and the prospect of interest rate rises to 6% by next year.
Santnder, Halifax, Virgin Money, Halifax and Skipton Building Society are among the major lenders that have closed mortgage offers to new customers in the last couple of days. However, existing mortgage applications will be processed as normal.
Smaller lenders are also retreating from the market, with Nottingham for Intermediaries withdrawing 14 deals from its shelves and repricing a range of residential and buy-to-let mortgages.
Scottish and Darlington building societies are also reported to be pulling their fixed rate products.
Jamie Lennox, director at broker Dimora Mortgages, said: “The future is certainly looking bleak when Halifax, the largest lender in the UK, pulls a big selection of products on offer.
“The UK economy is on red alert and lenders and borrowers alike are having to keep a keen eye on what is a rapidly changing rate environment.”
Lenders are reacting to uncertain future pricing conditions. The sudden fall in the pound on Monday led to fears of further inflation, and the prospect of the Bank of England responding with more rate hikes.
Last week the Bank’s rate-setting Monetary Policy Committee (MPC) raised interest rates for the seventh consecutive time to 2.25%.
While the Bank swerved a swift emergency rate rise this week, it said it will monitor the volatile performance of sterling and it “will not hesitate” to raise the Bank rate to control inflation when it next meets on 3 November.
Financial turmoil follows the raft of tax cuts announced by the Government in its mini-Budget on Friday, which triggered market uncertainty around the UK’s level of borrowing.
However, in a bid to ‘restore orderly market conditions’, the government has today announced it is carrying out temporary purchases of UK government bonds by auction between today (28 September) until 14 October.
Outlook for borrowers
Fixed rate mortgages – the most popular type of deal among borrowers – are priced according to ‘swap’ rates, which reflect expected interest rate movements, rather than what interest rates are today.
The cost of the cheapest two- and five-year fixed rate mortgages is now more than three times higher than a year ago, so borrowers coming to an end of their deal now, or looking to buy, will face higher costs and have fewer mortgages to choose from.
Mortgage lenders allow you to book in your next mortgage rates up to six months in advance, so if your deal is nearing expiry, it could pay to contact a fee-free broker ahead of time.
Rising property prices could mean that, if you’re remortgaging on your existing property, your loan-to-value bracket is lower, at least unlocking the cheapest of the higher-priced deals available.
Read more on How To Ride Out The Mortgage Storm and work out potential monthly repayments against varying interest rates with our Mortgage Calulator.
22 September: Bank Rate Hiked From 1.75% To 2.25%
Mortgage borrowers – and those attempting to get onto the housing ladder – were handed a further blow today as the Bank of England announced a seventh consecutive rise in interest rates.
The 0.5 percentage point hike from 1.75% to 2.25%, agreed by the Bank’s rate-setting Monetary Policy Committee (MPC), will affect around 2.2 million households on variable rate mortgage deals.
The hike will add around £99 a month onto the cost of a £400,000 mortgage, £62 a month onto the cost of a £250,000 mortgage, or £37 a month onto the cost of a £150,000 mortgage.
Borrowers on tracker rates – which mirror movements in the Bank rate by a set margin – will see an immediate impact in payments, while those paying standard variable rates (SVRs) will see the rise at their lender’s discretion.
However, pressure is mounting on lenders to refrain from passing on the full impact of the latest rise, as households continue to struggle with rising living costs. Even before today’s hike, average SVR costs stood at 5.4% according to Moneycomms.co.uk.
Those looking to buy for the first time will have an even steeper road to climb in terms of showing sufficient affordability against lenders’ more expensive mortgage rates.
James Turford, at Even, a mortgage broker for first-time buyers, said: “There’s never been a harder climate for first-time buyers in the UK. The combination of sky-high property prices and rapidly rising essential living costs have made it nearly impossible for many wanting to take their first step onto the property ladder.”
Mortgage deals of up to 95% of the property value are available, while first-time buyers in England and Northern Ireland are exempt from paying stamp duty on the first £300,000. Government schemes such as Help to Buy are available to help bridge affordability shortfalls, but only on new-build homes.
Until the rate of inflation cools from its current rate of 9.9% – the government target is just 2% – further interest rate rises are widely expected. However, the Bank of England has revised its peak inflation forecast down from 13% by the end of the year to 11% in October.
While there is nothing you can do about rising interest rates, it is possible to book a mortgage rate for your current home up to six months in advance – even if you are currently tied into a fixed rate deal.
Use our live mortgage tables to find out what kind of mortgage rates are available for your needs and circumstances.
1 August: Scrapping of lender ‘stress test’ relaxes mortgage affordability
Rules for would-be mortgage borrowers have been relaxed from today, as lenders no longer need to apply additional affordability tests.
Under Bank of England rules, banks and building societies had been forced to calculate whether prospective borrowers could afford their mortgage payments if the interest rate they were being offered was to rise by 3 percentage points during the initial five years of the loan.
The rules were introduced by the Bank of England in 2014 and revised in 2017. However, interest rates only increased by a maximum of just 0.5 percentage points between 2017 and 2021, prompting concerns that the 3% ‘stress test’ uplift was too high.
Lenders will now base their calculations on forecasted interest rates, although this must include a minimum ‘stress buffer’ of at least 1 percentage point above a borrower’s original mortgage rate.
However, Paul Johnson, head of mortgages at St. James’s Place said, the scrapping of the stress test, “won’t have a big impact on lenders’ affordability calculations as they will need to factor in increases in utility bills.”
Energy bills are expected to soar as high as £3,500 a year in October for a dual-fuel typical-use household.
Currently pegged at 1.25%, some forecasters are suggesting that interest rates will rise to 1.75% when the Bank of England announces its next decision on Thursday.
8 July: First Direct Launches 10-Year Fixed Rate With Unlimited Overpayments
First direct has, today, launched a new 10-year fixed rate mortgage in response to growing demand for greater security around household finances.
Borrowers are permitted to make an unlimited number of overpayments during the fixed-rate term with no penalty. Usually, lenders limit overpayments on fixed rate deals to 10% of the outstanding loan each year.
Interest rates on the mortgage – which is capped at a maximum loan size of £550,000 – are priced between 3.34% and 3.69% depending on the size of your deposit.
As an example, borrowers with the minimum 20% deposit will pay 3.59% with a £490 product fee, or the slightly higher rate of 3.69% for the fee-free option.
The mortgage is available to first-time buyers, homemovers, remortgagers, and those looking for additional borrowing, while borrowing terms can extend to up to 40 years.
First Direct joins a number of other lenders to offer 10-year fixed rate mortgages including Halifax, TSB and Lloyds, as demand grows for long-term financial certainty.
The cost of living is soaring with annual inflation at 9.1% in the year to May, while the Bank of England’s Base rate has risen five times since December from 0.1% to its current 1.25%.
Chris Pitt, chief executive of First Direct, said: “The cost of living crisis in particular has forced homeowners and prospective buyers to rejig their monthly incomings and outgoings, of which mortgage payments tend to take up the lion’s share.
“After a string of base rate hikes in 2022, the launch of this product is to give homeowners and buyers long-term peace of mind while external volatility – such as soaring house prices and rising utility bills – shows no signs of abating.”
First direct also offers two-year and five-year fixed rate mortgages. In April this year, it also launched a 5% deposit mortgage.
24 June: First Mortgage Deals Launched Under Help To Build Equity Loan Scheme
Today sees the launch of a government-backed scheme designed to help buyers with small deposits onto the property ladder with homes tailored to their exact requirements.
Help to Build, which is available in England only, offers self or custom (building on an existing shell or structure) home-builders an equity loan of between 5% and 20% (up to 40% in London), so long as they can put down a deposit of at least 5%.
The remaining 95% must be funded with a self-build mortgage from a lender registered with the scheme, which is offered by Homes England.
Darlington Building Society is the first lender to launch a Help to Build mortgage, which it is offering in conjunction with BuildLoan. It has two deals available, both three-year discounted rates priced at either 5.39% or 5.99%.
This, and other mortgages under the scheme, are offered on an interest-only basis for the duration of the build – which must take no longer than three years – but will switch to a repayment deal when the work is complete.
Darlington says it will release funds in advance of each stage of the building work required.
According to Housing Minister Stuart Andrew, Help to Build will, “break down the barriers to homeownership, as well as create new jobs, support the construction industry and kickstart a self and custom-build revolution.”
However, borrowers cannot use the government’s equity loan towards the cost of the build itself as the funds are paid directly to the lender only once the home is completed. The purpose of the equity loan is therefore to reduce the amount that’s being borrowed on the mortgage.
Repayments on the equity loan, which begin at the same time as the mortgage repayments, work in the same way as the government’s Help to Buy equity loan scheme, which closes in March 2023.
This means that for the first five years, repayments are interest-free. In year six, interest is charged at 1.75%. Repayments then increase every April based on the cost of the Consumer Prices Index measure of inflation (as measured in the previous September) plus a further 2%. CPI currently stands at a 40-year high of 9.1%.
Borrowers can pay back the equity loan at any time after the build is finished but it must be repaid in full by the end of the mortgage term or when the home is sold, whichever happens sooner.
Because it’s an equity loan, the amount you owe grows relative to the property value. This means if house prices go up, you will pay back more than you initially borrowed.
The Help to Build equity loan is not exclusively for first-time buyers, but you must live in the newly-built home as your only property to be eligible. It is not available to upgrade a home you already live in. Finally, you will need outline planning permission for the land you want to build on before you can apply.
23 June: Cost-Of-Living Crisis Means Fifth Of Homeowners Struggling To Pay Mortgage
One fifth (20%) of UK homeowners say they are unsure how they will afford their next mortgage payment, according to a recent survey by our online mortgage broker partner, Trussle.
The online survey gathered responses from 2,000 homeowners across the UK in May 2022. It also found that 38% of respondents were worried about their mortgage payments in the midst of the cost-of-living crisis.
Amanda Aumonier, head of mortgage operations at Trussle, says homeowners should consider remortgaging. According to Trussle research, this could save households up to £4,000 a year compared with a standard variable rate (SVR) mortgage.
Trussle says around 800,000 UK homeowners are currently on an SVR mortgage, and only 10% of homeowners have checked whether they are able to remortgage.
Ms Aumonier said: “Homeowners are facing a perfect storm of challenges that is pushing their finances to breaking point. This has left many feeling deeply worried as to how they can keep paying their monthly bills and make ends meet.
“However, we would urge people not to simply put their heads in the sand when it comes to their household finances. There is a range of measures from remortgaging to locking in a long term deal that can help give you greater stability and certainty.”
Although interest rates have risen, fixed mortgage rates remain competitive and the gap is closing between the cost of short and longer-term deals. Trussle has found a difference of just 0.45% between the average two-year and 10-year fixed mortgage interest rates as of June 2022.
20 June: Would-Be Borrowers To Face Less Onerous Scrutiny
The Bank of England (BoE) is withdrawing its mortgage affordability test from 1 August.
The affordability test was introduced in 2014 and revised in 2017. It specifies a ‘stress interest rate’ to be used to calculate whether prospective borrowers would be able to meet their payments if their rate reached 3 percentage points higher than the original during the first five years of the mortgage.
However, actual interest rates increased by a maximum of only 0.5 percentage points from 2017 to 2021, prompting concerns that this 3% stress rate uplift was too high. Lenders will instead base their ‘stress test’ on forecast interest rates, although this must include a minimum ‘stress buffer’ of at least 1 percentage point above the original mortgage rate.
The move has been welcomed by Lawrence Bowles, director of research at estate agent Savills: “Removing the current stress testing could mitigate some of the impact of higher interest rates. In theory, at least, it should open up a little more capacity for house price growth.”
The removal of the test should make it less onerous for prospective borrowers to prove their ability to meet future mortgage repayments. However, rising house prices and interest rates are likely to continue to prove a hurdle for mortgage applicants.
The latest Rightmove price index showed a continued, albeit more modest, rise in property prices last month. According to Mr Bowles, the BoE’s announcement should provide “welcome relief to some would-be-buyers struggling to keep up with current criteria because of significant price growth of the past two years”.
Lenders will now be required to assess affordability by making reference to the market’s established ‘responsible lending’ rules, which include setting a maximum loan according to a multiple of the applicant’s income and analysing existing outgoings. Lenders will continue to be limited by the number of mortgages they are able to offer at loan-to-income ratios of 4.5 and above.
The announcement comes against a backdrop of rising interest rates, with the BoE increasing interest rates for the fifth consecutive time last week. Further interest rate hikes are predicted to tackle the soaring inflation rate in the UK, which will have a knock-on impact on both mortgage rates and the affordability of new mortgages.
Mr Bowles also added that “improved capacity for growth would also be dependent on how far lenders are prepared to push loan-to-income multiples under responsible lending rules”. However, he believes it is “unlikely to open up the mortgage-credit floodgates”.
16 June: Rate Rise To 1.25% Adds To Cost Of Living Woes
Our mortgages expert, Laura Howard, says today’s decision by the Bank of England to raise the UK Bank Rate to 1.25% will be unwelcome news for the nation’s homeowners and potential buyers.
“While it was widely expected, this latest rise is worrying news for the nation’s millions of mortgage holders who are already grappling – or even unable to meet – the relentless rising cost of essentials such as energy bills, fuel, and even grocery shopping.
“Anyone paying their mortgage lender’s standard variable rate (SVR), or who is on any mortgage deal that’s linked to the Bank Rate, will be forced to absorb an almost immediate impact of today’s hike into the cost of their monthly payments.
“As an example, the latest 0.25 percentage point rise will add around £26 onto the monthly cost of a £200,000 variable rate mortgage priced at 2.5%. But cumulative hikes since December 2021 – when Bank Rate stood at a much leaner 0.1% – will have added over £100 a month onto the same mortgage. That’s over £1,200 a year.
“First-time buyers and those looking to remortgage are likely to find that today’s hike, and those that have gone before it, have already been factored into the cost of new mortgages, while homeowners who are part-way through a fixed-rate mortgage will be sheltered from rate rises for now.
“But when their fixed deal ends they will be facing much higher mortgage costs.
“In light of this, it might be worth considering reserving your next mortgage deal on your current home, which you can typically do between three and six months in advance of it starting. This essentially means securing rates as they are today and taking advantage later in the year if they have since gone up.
“There is no obligation to take the deal so there’s nothing to lose if you change your mind.”
14 June: Supply Squeeze Doubles ‘Down-Valuation’ Mortgage Rejections
The number of mortgage applications rejected because a lender thought a property wasn’t worth the amount the applicant wanted to borrow has doubled since the Covid-19 pandemic.
‘Down valuations’, where there’s a mismatch between the agreed sale price of a property and the valuation carried out on behalf of a mortgage lender, can cause serious problems with mortgage applications.
For example, a borrower might agree a sale price of £350,000 with a property owner, only to find their mortgage lender values the property at just £300,000 and rejects their application.
With demand outstripping supply in the housing market, buyers are increasingly willing to pay over the odds for properties, leading to the increase in down valuations, according to an online mortgage broker Mojo Mortgages.
‘Sellers are trying their luck’
Its research shows the rate of down valuations was at 12.8% in April, up from 10.4% a year earlier and double its mid-pandemic rate of 6.4% in December 2020.
Down valuations on remortgages was higher in April, at 15.4%.
Richard Hayes, co-founder and chief executive of Mojo Mortgages, said: “The property market has seen unprecedented demand over the last couple of years, with month after month of record price rises.
“This level of demand means that, in my opinion, some sellers are trying their luck and setting a selling price higher than estate agents recommend. With some properties, like three-bed homes, in such high demand, sellers are trying to see what they can achieve.
“With supply of new homes onto the market still well below demand, buyers are also willing to pay more for a property because of the lack of similar alternatives.”
Dealing with a down valuation
Buyers faced with down valuations may be able to renegotiate the sale price with sellers, especially if the sellers themselves are in the market for a new property and are relying on the sale to fund their next purchase.
Some lenders also allow appeals on down valuation decisions, but require strong evidence about the sale prices of other properties in the same area in order to change their decision.
Also, it may be that a valuation has been carried out remotely by someone at their desk. It may be worth asking for an in-person valuation to reevaluate anything you think they might have missed.
Each lender handles down valuations differently. It’s possible that a different lender, using a different surveyor, will return a valuation that’s closer to your agreed sale price.
Or if you’re able to increase your deposit, you could close the gap between the lender’s valuation and the sale price.
Alternatively, you could speak to your lender about a higher loan-to-value (LTV) ratio – that is, the amount you want to borrow in relation to the value of the property. Be aware, however, that higher LTVs typically mean higher rates of interest and more expensive monthly repayments.
Figures from Halifax earlier this week showed average house prices grew by 10.5% in the year to May, up to £289,099. Prices grew by 1% compared to April marking the 11th consecutive month of price rises, partially caused by the imbalance of supply and demand in the housing market.
April 27: First Direct Launches Debut 95% Mortgage
First Direct has launched its first ever 95% loan to value (LTV) mortgage for first-time buyers and people moving home.
Borrowers with a 5% deposit can choose from a two-year or five-year fixed rate, priced at 2.79% and 2.94% respectively. Both options are fee-free. The deal is available on loans of up to £550,000, meaning that buyers are able to borrow up to £522,500 if they have a deposit of £27,500.
It is not available to remortgagers.
First-rung boost
In further bid to ease affordability constraints, First Direct’s 95% mortgage is available over a repayment term of up to 40 years. However, it also permits unlimited overpayments which can be made at any time, enabling borrowers to essentially reduce this term penalty-free.
Chris Pitt, chief executive of First Direct, said: “While the property market continues to speed along in the fast lane, first-time buyers have been left behind. While house prices continue to outpace deposits, we see this as a viable way of helping people onto the ladder.”
The mortgages also come with a six-month Agreement in Principle (AIP) compared to an industry average of two to three months.
Which other lenders offer 95% mortgages?
There are currently 56 mortgages available at 95% LTV, according to online mortgage broker Trussle. This is a considerable uplift from 2020, as the deals all but disappeared from the market during the pandemic over concerns around affordability.
In March 2021 the government launched a new Mortgage Guarantee Scheme to encourage lenders to start offering high LTV mortgages again.
Lenders that offer 95% LTV mortgages include Barclays, Santander, HSBC, NatWest, Skipton Building Society and Clydesdale Bank.
How do the First Direct deals compare?
First Direct’s offerings stack up well against other 95% deals which – due to the higher lending risk – come with higher rates than mortgages with lower LTVs.
Barclays has a two-year fixed rate mortgage priced at 2.67% with no fee – slightly cheaper than First Direct’s two-year deal of 2.79%. However, as part of the government’s Mortgage Guarantee Scheme, Barclays’ offering comes with associated restrictions, such as it cannot be used to buy new-build homes.
HSBC, First Direct’s parent bank, offers the choice of a two-year fixed rate of 2.69% with a £999 fee, or an equivalent 2.79% with no fee, while Newcastle Building Society charges 3.15% with no fee and £500 cashback.
Looking at five-year fixed rate 95% mortgages, Barclays offers the same rate as First Direct’s 2.94%, while HSBC’s offering is slightly higher at 2.99%. Both deals are also fee-free.
However, all deals with the exception of First Direct’s, limit penalty-free overpayments to 10% a year.
For up-to-date mortgage rates, input your criteria into our mortgage tables below.
Choosing a deal
It’s important to factor in all considerations when choosing a mortgage, including fees versus headline rate, tie-ins and early repayment charges.
Look also at the follow-on rate, which is what the deal will revert to at the end of the term. That said, many homeowners look to remortgage to another rate once their initial fixed rate period ends.
A fee-free independent mortgage broker such as our partner Trussle, will crunch the numbers on your behalf and advise on the best deals for your circumstances.
Amanda Aumonier, head of mortgage operations Trussle, said: “High loan-to-value mortgages can play a crucial role in ensuring the market remains accessible to all, by slashing the size of deposits needed to secure a home. We hope to see this trend continue so that everyone can aspire to own their own home.”
