The housing market has been hugely impacted by the rise in interest rates in the past year, meaning many Brits are struggling to pay their mortgages or get on the housing ladder due to spiraling costs.
Research published in the Cost of Living report by UK savings site Vouchercodes.co.uk in August 2022 found that 11 per cent of potential buyers had to push back plans to buy a home by at least one year, while almost a third (29%) of prospective home buyers in the UK said they cannot afford to buy a home.
© iStockThankfully, mortgage rates have started to fall from the highs we saw after the government announced its mini-budget in September, meaning rates below five per cent are common, and buyers may even be able to find some sub-4% deals. However, the cheapest deals are still five times the record lows of 0.79% recorded in late 2021.
READ: 28 easy tricks to make your home sell fast without spending a penny
So who has the best mortgage deals at the moment? We've rounded up some of the best mortgage rates available right now, but note that while these figures are correct at the time of writing, there's no guarantee the specific deals will remain available longer-term. Working with a mortgage broker will help to provide you with the best current deals for your situation.
All deals are calculated based on the average UK house price of £290,000 with a mortgage term of 25 years.
Best mortgage deals for first-time buyers
First-time buyers looking for a mortgage may be able to take advantage of special deals or schemes allowing them to purchase a property with less than the standard ten per cent deposit. These first-time buyer mortgage deals, or 95% mortgages, allow buyers to invest in a property with a deposit of five per cent of the purchase price.
READ: Discover the most affordable UK cities for first-time buyers
© Photo: iStockBest 95% LTV/ first-time buyer fixed-rate mortgage deals
Mortgage Lender
Newcastle Building Society
Monmouthshire Building Society
Fixed-rate term length
2 year fixed-rate
2 year fixed-rate
Fixed interest rate
5.25%
4.90%
Rate after deal ends
5.19%
6.99%
Best fixed-rate mortgage deals in the UK
Fixed-rate mortgages can be appealing to buyers, as they mean that your mortgage rate will not change for a set period of time – from as little as two years to as many as ten years. The rates will also vary depending on the size of your deposit.
The rates below are based on a 60%, 80% and 90% loan-to-value purchase of a property that costs £290,000 where the mortgage is taken over 25 years.
Best 2 year fixed-rate mortgage deals
Mortgage Lender
Furness Building Society
First Direct
Furness Building Society
Loan to Value
90%
80%
60%
Fixed interest rate
4.95%
4.59%
4.27%
Rate after deal ends
7.99%
6.99%
7.99%
Best 5 year fixed-rate mortgage deals
Mortgage Lender
First Direct
First Direct
Progressive Building Society
Loan to Value
90%
80%
60%
Fixed interest rate
4.44%
4.19%
4.04%
Rate after deal ends
6.99%
6.99%
7.84%
Best 10 year fixed-rate mortgage deals
Mortgage Lender
Nationwide
First Direct
Platform, part of The co-operative bank
Loan to Value
90%
80%
60%
Fixed interest rate
4.74%
4.14%
4.08%
Rate after deal ends
7.74%
6.99%
7.12%
Best tracker mortgage deals in the UK
A tracker mortgage, or variable rate mortgage, means that your monthly mortgage payment can fluctuate along with your interest rate. This can be a good thing for homeowners when reduced rates occur, but may also mean that your monthly payments increase at times that interest rates rise.
MORE: Phil Spencer's insider tips on how to haggle on your house purchase
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Discover the best two and five year tracker rate mortgage deals below. As above, these rates apply to 60%, 80% and 90% loan-to-value purchases of a property that costs £290,000 where the mortgage is taken over 25 years.
Best 2 year tracker mortgages in the UK
Mortgage Lender
Progressive Building Society
Progressive Building Society
Progressive Building Society
Loan to Value
90%
80%
60%
Interest rate
4.04%
4.04%
4.04%
Rate after deal ends
7.84%
7.84%
7.84%
Best 5 year tracker mortgages in the UK
Mortgage Lender
Chorley Building Society
Chorley Building Society
Chorley Building Society
Loan to Value
90%
80%
60%
Interest rate
4.8%
4.8%
4.24%
Rate after deal ends
7.74%
7.74%
6.25%
Still unsure about which mortgage is best for you? We caught up with David Hollingworth, Associate Director at L&C Mortgages, to get the answers to some of the most common mortgage-related questions.
Will mortgage rates go down in 2023?
"When will rates come down is probably the million dollar question, especially as there’s just been another hike to base rate in May and speculation of another rise to come. If inflation begins to fall back as hoped then it could mean that the increases in Base Rate are at least nearing their peak. That may not see much change in fixed rates in the near term but if the situation improves more quickly than anticipated it could see improvements to fixed rates. Longer term fixed rates are unusually lower than the shorter term options which is an indicator that the markets expect interest rates to fall back over time. Whether that will be as soon as this year is another matter. Of course there are never any guarantees when it comes to rate movements and borrowers need to keep a focus on what will suit their needs rather than taking any big gambles on future rate moves."
Is it worth considering a 100 percent mortgage?
"Until recently any mortgages offering up to 100% of the purchase price have relied on additional security being put up by family, whether that is additional cash locked down in a savings account or equity in the parental home as collateral. However the recent launch from Skipton BS is the first time since 2008 where a deal has offered the chance for a first time buyer to buy without a deposit or help from a parent. This could offer some first time buyers the chance to buy sooner than they otherwise would be able to by removing the need to scrape together a deposit of at least 5% of the purchase price.
RELATED: Martin Lewis' cautious warning about new 100% mortgages
"This product will carry additional eligibility requirements and borrowers will need to demonstrate that they can afford it. However, it could help those that feel they are battling against the odds to save for a deposit whilst paying a high rent. There is a higher risk of negative equity if prices fall back so that needs to be considered but equally if prices rise further, it could push ownership further from reach."
What should first-time buyers consider when looking for a mortgage?
"The two challenges for first-time buyers are saving a big enough deposit and being able to borrow enough to meet the required purchase price. Criteria can therefore play as big a part as interest rate in finding the right match so it makes sense to take advice. Lenders will base the amount they can lend not only on income level but also on the outgoings to make sure that the affordability is tailored to the individual circumstance.
"When it comes to deposit then the general rule of thumb is that the bigger deposit the better the range of options and rates are likely to be. It also makes sense to factor in any additional costs such as arrangement fees and incentives that could help with valuation fees or offer a cashback. These may add up to better overall value than a lower rate carrying bigger fees."
Is now a good time to remortgage?
"Given the rapid increases in interest rates and the higher cost of living that homeowners face, it’s never been more important to make sure you get the best value from your mortgage deal. Although borrowers will have been used to historically low rates in recent years the higher rate environment means that shopping around will be crucial to keep a tight rein on the mortgage rate.
"Fixed rates have stabilised and improved since they rocketed after the mini budget so although borrowers coming to the end of a deal will still be facing a higher payment it’s far less volatile than it was. Fixed rates will give security and certainty so that borrowers can pin down their mortgage costs whereas tracker rates have been rising in line with base rate rises but could fall back if interest rates drop in time.
"Many lenders will offer remortgage deals that can cover many of the fees associated with a remortgage, such as the valuation fee and the basic legal work required to make the switch of lender. It may be worth paying a slightly higher interest rate to avoid those costs and an adviser will help work through the numbers to find the right overall combination."
How can buyers get the best mortgage rate?
"When buying a new home there may well be a bigger deposit from the sale of the previous home which could mean that the mortgage is a lower percentage of the property value, often referred to as loan to value or LTV. The very best rates are often reserved for those with a low LTV so a next time buyer could find that they have a good choice of mortgage rates. They should think about what they want from the new mortgage and what their plans may be. For example it’s possible to fix a mortgage for the longer term, which could suit a buyer who is stretching but plans to be in the property for the longer term. Others may prefer to keep their options open if they feel that their circumstances could change.
"It makes sense to do the numbers before looking at property so that they understand all the costs including estate agent fees, survey costs and legal and stamp duty costs. That will help give a clearer picture of what mortgage deals could be on offer and how much may need to be borrowed."
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FAQs
Best mortgage deals 2023 for first-time buyers, fixed-term rates and tracker mortgage deals? ›
Mortgage rates could decrease next week (May 29-June 2, 2023) if the mortgage market takes a cautious approach to a possible recession. However, rates could rise if lenders account for the Federal Reserve taking measures to counteract inflation or if a global event brings economic uncertainty.
Are mortgage interest rates going to go down in 2023? ›Mortgage rates could decrease next week (May 29-June 2, 2023) if the mortgage market takes a cautious approach to a possible recession. However, rates could rise if lenders account for the Federal Reserve taking measures to counteract inflation or if a global event brings economic uncertainty.
What is the prediction for mortgage rates in 2023? ›Mortgage Rate Predictions For 2023
How wide is the gap? Fannie Mae sees the average rate of a 30-year fixed getting to 6.8% in 2023. Meanwhile, the prediction from Freddie Mac is 6.4%. The Mortgage Bankers Association is the real outlier, projecting the 30-year rate at 5.2% next year.
So, why would a first-time buyer sign up for a 30 or 40-year mortgage? For most people, it's to spread the cost. If, rather than going for a 25-year term, you choose a 30-year mortgage then your monthly payments will be reduced, giving you more cash to spend on things that are important to you.
Is it best to go on a tracker mortgage? ›A tracker mortgage offers you an interest rate that can go down or up, but which is generally lower than a standard variable rate (SVR) mortgage. If rates are low, or likely to fall in the near future, a tracker mortgage may be attractive. However, if rates rise, you'll pay more each month.
How high will interest rates go by the end of 2023? ›We expect that 30-year mortgage rates will end 2023 at 5.2%.”
Will mortgage rates go down in 2023 2024? ›Fannie Mae, Mortgage Bankers Association and National Association of Realtors expect mortgage rates to drop through the first quarter of 2024, by half a percentage point to about nine-tenths of a percentage point. Figures are the predicted quarterly average rates for the 30-year fixed-rate mortgage.
What will a 30-year mortgage be in 2023? ›As of May 26, 2023, the 30-year fixed mortgage rate is 7.53%, the FHA 30-year fixed rate is 7.42%, the VA 30-year fixed rate is 7.27% and the jumbo 30-year fixed rate is 6.27%.
What are mortgage rates for 2023 and 2024? ›Fannie Mae expects the 30-year fixed to ease to around 6.1% in the second quarter of 2023, before falling to 5.9% in the third quarter and 5.7% in Q4. And it gets even better than that. By the end of 2024, they expect the 30-year fixed to average 5.2%.
What is a tracker mortgage? ›The full name of a tracker mortgage is a variable rate tracker mortgage. This is a type of mortgage where the interest rate you pay is linked to the Bank of England's base rate. The interest rate on a tracker mortgage changes with the Bank of England base rate, which affects how much your repayments will be each month.
Will my first mortgage payment be higher? ›
What to expect from your first mortgage payment. First payments can be higher than your ongoing monthly payment. This is because it'll include interest from the date we released the funds, up to the end of that month, plus your payment for the following month.
What are the best credit scores for first time home buyers? ›It's recommended you have a credit score of 620 or higher when you apply for a conventional loan. If your score is below 620, lenders either won't be able to approve your loan or may be required to offer you a higher interest rate, which can result in higher monthly payments.
How much do you pay on a tracker mortgage? ›If you have a tracker mortgage, the amount of interest you pay on your mortgage might be the base rate, plus or minus a certain percentage. So if the base rate in the example increased to 1%, the rate you pay would go up to 2.5%.
Is Tracker mortgage going up? ›Repayments on a typical tracker will have gone up by €1,650 over a full year due to the latest ECB rise of 0.5 percentage points, combined with the previous ones.
Are tracker mortgage rates going up? ›Tracker mortgages are designed so that your interest rate goes up and down in line with the Bank of England base rate. This means we'll be increasing our tracker mortgage rates from 1 June 2023.
What will interest rates be in 2023 2024? ›| Loan Type | 10-Year Treasury Note High Yield | Fixed Interest Rate |
|---|---|---|
| Direct Subsidized Loans and Direct Unsubsidized Loans for Undergraduate Students | 3.448% | 5.50% |
| Direct Unsubsidized Loans for Graduate and Professional Students | 3.448% | 7.05% |
The US Federal Reserve will deliver a final 25-basis-point interest rate increase in May and then hold rates steady for the rest of 2023, according to a Reuters poll of economists. The poll also showed that a short and shallow US recession is likely this year.
What is the date of the next Federal Reserve meeting 2023? ›The Fed - May 2-3, 2023 FOMC Meeting.
Will mortgage rates go down summer 2023? ›How High Will Mortgage Rates Go in 2023? While rates could climb slightly higher over the next month or so, experts predict a modest decline after that. Freddie Mac, for example, forecasts a 6.2% rate in the fourth quarter and an annualized rate of 6.4% for the year without stating a specific peak rate.
Is 2023 good year to buy a house? ›The most recent Homebuyer.com data indicates that, for first-time home buyers, May 2023 is a good time to buy a house. This article provides an unbiased look at current mortgage rates, housing market conditions, and market sentiment.
What happened with Tracker mortgages? ›
The Central Bank has subsequently informed me that 6,000 tracker mortgage accounts impacted by the tracker mortgage examination were sold on by retail banks. We know these mortgage holders were ripped off by the banks and then had their loans sold to vultures, and it was a real kick in the teeth for them.
When did banks stop offering tracker mortgages? ›Why did banks stop offering tracker loans in 2008? Tracker mortgages, introduced to Ireland in 2001 by Bank of Scotland, were a profitable way for banks to lend as their own borrowing costs in financial markets dropped significantly following the establishment of the euro in 1999.
Can you pay off tracker mortgage early? ›You can make extra mortgage repayments or clear your mortgage earlier than agreed without having to pay any penalties. If you move from a tracker interest rate to an alternative interest rate, such as a fixed interest rate, you cannot go back to onto a tracker interest rate in the future.
What day of the month should I pay my mortgage? ›Since mortgages are paid in arrears and on the first of the month, your first mortgage payment typically comes at the start of the new month after you've lived in your new home for 30 days. This means that if you close on your house on May 25, your first payment is due July 1.
How much difference does 1% make on a mortgage payment? ›Mortgage rates increase in increments of 0.125%, and although one percent may seem like an insignificant amount, a quick glance at the numbers would tell you otherwise. As a rough rule of thumb, every 1% increase in your interest rate lowers your purchase price you can afford for the same payment by about 10%.
How much should you put down on your first mortgage? ›A 20% down payment is widely considered the ideal down payment amount for most loan types and lenders. If you can put 20% down on your home, you'll reap the following key benefits.
What credit score is needed for a 300k house? ›Additionally, you'll need to maintain an “acceptable” credit history. Some mortgage lenders are happy with a credit score of 580, but many prefer 620-660 or higher.
What is the lowest credit score you can have and still buy a house? ›Across the industry, the lowest possible credit score to buy a house is 500. But there's a limited number of mortgage lenders that allow such low scores and their interest rates are typically higher. The most common loan type for bad credit borrowers is an FHA loan.
What credit score is needed to buy a house with no money down? ›What credit score do I need to buy a house with no money down? No-down-payment lenders usually set 620 as the lowest credit score to buy a house. You can boost your credit score by keeping your revolving charge card balances to a minimum and paying all your bills on time.
Can you overpay on a tracker mortgage? ›Tracker mortgage overpayments
If you have a tracker mortgage, you can make unlimited overpayments without an early repayment charge.
How popular is tracker mortgage? ›
Tracker mortgages are much more popular for homeowners aged 18-24, as 17.82% took on the risk of fluctuating interest rates influencing their monthly repayments, 13.67 percentage points more than 25-34 year olds.
Do tracker mortgages have a cap? ›Some tracker mortgages also have a cap, this is where the rate on the mortgage is capped and will not go above a certain interest rate. Some tracker mortgages don't have any early repayment charges, which can be beneficial if you want flexibility to make unlimited overpayments or redeem your mortgage fully.
Why are tracker mortgages cheaper? ›Tracker mortgages are generally cheaper to begin with than fixed rates. This is because fixed rates offer security against a rising base rate, whereas trackers can see monthly repayments rise.
How much will my tracker go up? ›Tracker for Mover rate will apply to the amount still owing on the tracker mortgage loan you have now and will be 1% higher than your current tracker rate. Any additional borrowing you need for your new home will be at the same fixed or variable rates available to new customers.
Is a tracker mortgage the same as a variable mortgage? ›What's the difference between a tracker mortgage and a variable mortgage? If you have a variable mortgage, a mortgage lender can set their own variable rate. However, a tracker mortgage normally follows the Bank of England's base rate – which they don't control.
Should I move from tracker to fixed? ›Recommendation: If your mortgage has a low margin, of 0.6% points to 0.75%, then it could still be worth holding onto your tracker. However, if your tracker mortgage is at a higher margin, say 1.25 % or above, then giving up your tracker in favour of a fixed rate is worth having a conversation over.
Is 4.15 a good interest rate? ›The 4.15% interest rate is quite high in comparison to both the national average and the lower rate typically offered by accounts tied to a company rather than done directly through the bank. Data crunched by financial services company Bankrate shows that the average APY across the country is just 0.24%.
What is the current interest rate? ›| Product | Interest Rate | APR |
|---|---|---|
| 30-Year Fixed Rate | 7.25% | 7.27% |
| 20-Year Fixed Rate | 7.12% | 7.15% |
| 15-Year Fixed Rate | 6.65% | 6.68% |
| 10-Year Fixed Rate | 6.76% | 6.79% |
Over the long term, you will undoubtedly save more money with a 15-year mortgage. Your total interest costs and total amount paid will be dramatically lower. Short term, though, you save money on your monthly payment by choosing the 30-year mortgage.
Is a 30-year mortgage a good idea? ›Because a 30-year mortgage has a longer term, your monthly payments will be lower and your interest rate on the loan will be higher. So, over a 30-year term you'll pay less money each month, but you'll also make payments for twice as long and give the bank thousands more in interest.
Is it better to get a 30-year mortgage? ›
A 30-year mortgage can make your monthly payments more affordable. While monthly payments on a 15-year mortgage are higher, the cost of the loan is less in the long run.
What is the most common term for a mortgage? ›The term of your mortgage loan is how long you have to repay the loan. For most types of homes, mortgage terms are typically 15, 20 or 30 years.
Is it better to have 2 or 5 year fixed-rate mortgage? ›Is it better to have a 2 or 5-year fixed mortgage? 2-year fixed mortgages often benefit from a lower interest rate, but the 5-year fixed mortgage rates offer you more long-term financial stability, as you're locked into the fixed deal for longer.
Is it better to get a shorter or longer fixed term on a mortgage? ›A longer term will also have a higher interest rate. Mortgage lenders need to protect their investments: without knowing the market in 10 years, they're taking a risk by fixing the mortgage term for that long. To make up for this risk, the fixed interest rate is higher than a shorter deal.
Is it better to get a 15-year mortgage or pay extra on a 30-year mortgage? ›People with a 15-year term pay more per month than those with a 30-year term. In exchange, they are given a lower interest rate. This means that borrowers with a 15-year term pay their debt in half the time and possibly save thousands of dollars over the life of their mortgage.
Can a 50 year old get a 30 year mortgage? ›Age doesn't matter. Counterintuitive as it may sound, your loan application for a mortgage to be repaid over 30 years looks the same to lenders whether you are 90 years old or 40.
What happens if I pay 2 extra mortgage payments a year? ›Making additional principal payments will shorten the length of your mortgage term and allow you to build equity faster. Because your balance is being paid down faster, you'll have fewer total payments to make, in-turn leading to more savings.
What is the average 30 year mortgage right now? ›Mortgages for over 50s
Many lenders will be happy to offer you a mortgage if you're over 50, with a standard 25-year term and competitive interest rates often available. In some cases, you may be asked to show evidence of your predicted retirement income.
Summary: maximum age limits for mortgages
Many lenders impose an age cap at 65 - 70, but will allow the mortgage to continue into retirement if affordability is sufficient. Lender choices become more limited, but some will cap at age 75 and a handful up to 80 if eligibility criteria are met.
How much more do you end up paying on a 30-year mortgage? ›
Higher interest rate: The longer a lender's risk of being repaid is stretched out (and the longer the lender's money is tied up), the higher the interest rate tends to be; customarily, the difference between 15- and 30-year loans is about a half-point.
What is the biggest factor to get a mortgage? ›- The Size of Your Down Payment. When you're trying to buy a home, the more money you put down, the less you'll have to borrow from a lender. ...
- Your Credit History. ...
- Your Work History. ...
- Your Debt-to-Income Ratio. ...
- The Type of Loan You're Interested In.
Home equity loans typically have much lower interest rates than other types of loans like personal loans or car loans. This means it won't cost as much to borrow the money.
What is the lowest term mortgage? ›Though typically a mortgage lasts for around 25 years, you can get longer mortgages over 40 years. At the other end of the scale, short term mortgages can be for as little as six months to two or five years. Lenders have their own minimum terms which vary from no minimum to a 15-year minimum.