All major lenders, except Halifax, have increased mortgage rates after the Bank of England kept interest rates on hold.
The average rate for a two-year fixed mortgage came in at 4.53% this week, up from the previous 4.49% according to data from Uswitch.
The average five-year fixed deal came in at 4.98%, unchanged from the previous week. Those are the average rates across all lenders for a 75% loan-to-value (LTV) mortgage, meaning buyers need a down payment of at least 25% of the purchase price.
The Bank of England has left interest rates on hold at 3.75% as expected, but relief may be coming for UK borrowers within months.
This time, the nine-member committee voted 5-4 in favour of holding the Base Rate at 3.75%, with the four in the minority preferring to cut rates to 3.5%. This offers further evidence that another cut may be in the pipeline.
Alice Haine, personal finance expert at Bestinvest, said: “Today’s decision to hold rates, coupled with uncertainty over exactly when further cuts may materialise, may feel unsettling for homeowners and prospective buyers hoping for further improvements in the mortgage market.”
“There is some good news, however: the BoE says further cuts are in the pipeline. Plus, mortgage affordability is improving. Six rate cuts since the summer of 2024, along with a more relaxed lending environment and a slower pace of house price growth, have helped to ease the affordability pressure for some – but expect a few bumps along the way.
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“Some major high-street lenders have upped mortgage rates in recent weeks in response to shifting interest rate expectations though borrowers must remind themselves that they are in a much better place than they were in 2023 when the average two- and five-year fixed-rate deals sat comfortably above the 6% mark.”
“While first-time buyers have missed the peak of the borrowing crisis, mortgaged homeowners emerging from two-or three-year fixes may now be able to refinance at more preferential rates. The group most likely to feel disappointed by the BoE’s latest interest rate decision are homeowners with large mortgages coming off ultra-low fixed rates secured before the central bank began hiking in December 2021. Many five-year deals secured in 2021 – when rates were at record lows – are now expiring, so household budgets must now adjust to accommodate higher repayments.”
Barclays (BARC.L) announced increases of up to 0.15 percentage points will take effect from Thursday, joining HSBC (HSBA.L), Nationwide, NatWest (NWG.L), Virgin Money and Santander (BNC.L), which all raised rates earlier this week. Halifax was the only major lender to leave rates untouched.
David Hollingworth of L&C Mortgagesaid, said: “We’ve been used to fixed rates dropping, and we won’t see rates rocket, but the more lenders nudge prices up, the more others will follow – that growing momentum will increase rates across the board.”
“Borrowers holding off for lower rates are probably going to get a sharp reminder that they’re not always possible.”
Here’s more detail on major lenders’ mortgage rates this week:
HSBC (HSBA.L) has a 3.76% rate for a two-year deal, with a £999 booking fee, which was higher than last week’s 3.66%. For those with a premier standard account with the lender, this rate is 3.73%.
Looking at the five-year options, the fixed standard rate is 3.88% with a £999 fee, which is unchanged.
Both cases assume a 60% LTV mortgage, meaning buyers need a deposit of at least 40%.
HSBC (HSBA.L) offers 95% LTV deals, meaning you only need to save for a 5% deposit. However, the rates are higher, with a two-year fix at 4.74% or a five-year fix at 4.79%.
This is because their financial situation and deposit size determine the rate someone can get. The larger the deposit, the lower the LTV, allowing buyers to access better deals because lenders consider them less risky.
Read more: Bank of England holds interest rates at 3.75%
The lender has recently unveiled a cashback offer of up to £2,000 to ease the upfront costs of entering the housing market.
The bank’s enhanced incentive package, which brokers say could ignite a fresh round of competitive pricing among high-street lenders, marks one of the most generous cashback schemes currently available. The measure is aimed at supporting borrowers struggling with deposit and moving costs at a time when affordability pressures remain high despite a recent easing in mortgage rates.
NatWest’s (NWG.L) two-year deal is 3.59% with a £1,495 product fee, more than last week’s 3.51%.
The cheapest five-year fixed deal comes in at 3.73%, also higher than the previous 3.70%. In both cases, you’ll need a deposit of at least 40% to qualify for the rates.
Barclays (BARC.L) has a two-year fix available at 3.65% with a £899 product fee, up from last week’s 3.57%. The five-year deal also rose to 3.90% from 3.79%.
Barclays (BARC.L) launched 95% loan-to-value (LTV) mortgages for purchasers of new-build houses, in a move aimed at easing the path to home ownership, especially for first-time buyers.
The offer applies to new-build houses with a maximum purchase price of £600,000. Previously, buyers were required to pay a 10% deposit, meaning a £60,000 deposit on a £600,000 property. Under the new criteria, that requirement could be halved to £30,000.
Earlier in the year, Barclays (BARC.L) launched a mortgage proposition to help new and existing customers access larger loans when purchasing a home.
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The initiative, known as Mortgage Boost, enables family members or friends to effectively “boost” the amount that can be borrowed toward a property without needing to lend or gift money directly or provide a larger deposit.
Under the scheme, a borrower’s eligibility for a mortgage can increase significantly by including a family member or friend on the application. For example, Barclays (BARC.L) stated that an individual with a £37,500 annual income and a £30,000 deposit could borrow up to £168,375, meaning the most they could afford would be a home worth £207,375.
However, with Mortgage Boost, the total borrowing potential can increase if a second person, such as a parent, is added to the application. In this case, if the second applicant also earns £37,500 a year, the combined income could push the borrowing limit to £270,000, enabling the buyer to afford a home worth up to £300,000.
Nationwide (NBS.L) has a two-year fix at 3.82%, up from 3.72% previously, for first-time buyers. For a five-year deal, the rate is4.16%, also up from 4.06%. Both deals require a 40% deposit and come with a £999 upfront fee.
First-time buyers also receive £500 cashback when they complete their mortgage with Nationwide (NBS.L).
The lender this week announced an expansion of its high loan-to-income (LTI) lending, a change that could see some borrowers access tens of thousands of pounds more than previously available.
Under the new terms, home movers and customers remortgaging will now be able to borrow up to six times their annual income. This enhanced offering extends to both new and existing customers moving home or remortgaging, and applies to loans with a loan-to-value (LTV) up to 95%.
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To qualify for this increased borrowing, sole applicants must demonstrate a minimum annual income of £75,000, while joint applicants must demonstrate a minimum yearly income of £100,000. These income thresholds remain consistent with previous requirements, which allowed eligible groups to borrow up to 5.5 times their income.
The changes mean that, for example, a sole applicant who was a new customer moving home or remortgaging, with an income of £75,000, may previously have been able to borrow up to £412,500 from Nationwide (NBS.L). But now they could potentially borrow up to £450,000 — an increase of £37,500.
Halifax, the UK’s largest mortgage lender, offers a two-year fix at 3.72% (also 60% LTV), which remains unchanged from last week.
The lender, owned by Lloyds (LLOY.L), also offers a 5-year rate of 3.88%, also untouched.
It has a 10-year deal with a mortgage rate of 4.87%.
Santander (BNC.L) withdrew its 60% LTV mortgage products for first-time buyers on borrowing of less than £250,000 on two- and five-year terms on 19 September.
A spokesperson for the bank said that the “change was part of a reprice following the changes to swaps after the Bank of England held interest rates”.
Santander (BNC.L) continues to offer products with LTVs of 85% or above for first-time buyers, with the cheapest two-year fix at 4.10% and the cheapest five-year fix at 4.23%.
For home movers with a 40% deposit, Santander (BNC.L) is now offering a two-year fixed rate of 3.51% and a five-year deal of 3.73%, a hike from the previous 3.72% deal.
The lender has launched a mortgage that lets first-time buyers borrow up to 98% of the property’s value.
The deal does require a minimum £10,000 deposit, though, so borrowers would need to be purchasing a home for £500,000 to have put down a deposit as low as 2%.
Read more: Six common remortgaging mistakes to avoid
Santander UK (BNC.L) said its “my first mortgage” deal has a fixed rate of 5.19% over five years and has no product fee.
The product, with up to 98% loan-to-value (LTV), is available for maximum lending of up to £500,000, repayable over a term of 5-40 years.
The deal is not available to self-employed applicants and covers only applicants living in Britain, with Northern Ireland excluded, Santander (BNC.L) said.
It is available for a minimum of £190,001 being borrowed, and £250 cashback is payable on completion.
Lending above 95% and up to 98% is available on existing houses only, Santander said.
All lending also remains subject to Santander’s (BNC.L) broader affordability checks, including a maximum loan-to-income multiple of 4.45 times salary.
NatWest (NWG.L) offers the most competitive 2-year deal on the market for first-time buyers, with a fixed rate of 3.59%. When it comes to a five-year fixed deal, NatWest (NWG.L) also takes the crown, with its 3.73% offer. However, any of these deals requires a hefty 40% deposit.
With the average UK house price at £297,755 in December, prospective homebuyers would need a deposit of around £120,000 to secure the cheapest rates.
A growing number of homeowners in the UK are opting for mortgage terms of 35 years or longer, with a significant rise in older borrowers stretching their repayment periods well into their 70s.
Skipton Building Society is allowing first-time buyers to borrow up to 5.5 times their income, helping more borrowers get on the housing ladder.
Leeds Building Society reduced the minimum household income requirement on its first-time-buyer mortgage range. This means single or joint first-time buyer applicants with a household income of £30,000 may now be able to borrow up to 5.5 times their earnings.
Mortgage holders and borrowers have faced higher repayments in recent years, as the BoE’s higher base rate has been passed on by banks and building societies.
Many homeowners will hope the Bank of England continues to cut interest rates. At the same time, savers will likely root for rates to remain at or near their current levels.
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