Mortgage Update: Will the SVB Collapse Stop Rate Increases? (2023)

March 14 - The Bank of England could keep interest rates at 4% next week

The collapse of Silicon Valley Bank last week could bring some welcome relief to UK mortgage borrowers.

There was a surprise run on SVB last week as its accountholders were startled by reports that the bank had suffered large losses on its government bond holdings.

Not only did the SVB's slide trigger a sell-off in banking stocks in global markets, it also sparked speculation that central banks, including the Bank of England and the US Federal Reserve, might cut interest rates or even stop raising rates.

Ahead of the SVB's woes, markets have priced in a 25pp hike in the Bank of England's bank rate next week from its current level of 4%. But that feeling has since changed.

This is good news for borrowers with variable and tracked rate mortgages who are preparing for higher monthly payments.

It could also mean better news for borrowers looking to reschedule for a new fixed income deal.

Swap rates, the wholesale interest rates at which banks lend to each other, have fallen sharply following the US news. Since fixed-rate mortgage rates are largely driven by swap rates, this means fixed-rate mortgage rates are less likely to rise in the short term .

Nick Mendes, Technical Manager of Mortgages at John Charcol Brokerage said: “On March 10th 2 year swaps were trading at 4.28% and 5 year swaps at 3.87%. Currently they have fallen to 4.14% (two years) and 3.70% (five years).

“As interest rates are changing, we will likely see fluctuations in mortgage rates. Nobody can predict exactly where interest rates will be in the future, and yet there are many factors that can change in a short period of time.

“But for those approaching the final six months of an expiring fixed rate mortgage contract, getting a competitive rate contract now means you can hedge your bets. If prices go up, you're locked into a lower price offer, and if prices fall between now and the expiry of the current offer, you still have the option to switch to a new price at that time."

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “The market feels that some of the interest comes from potential rate hikes. The fall in exchange rates over the past two days could impact fixed rate mortgage prices.

“We were expecting two more rate hikes, but now it looks like one. This will be good news for borrowers, especially those who need quality mortgages that pay comparatively higher interest rates."

March 10 - Regulators urge creditors to increase support

Lenders continue to hike rates as the market awaits the Bank of England's next interest rate decision on March 23rd.describe Jo Thornhill.

The bank's interest rate, currently at 4%, is expected to continue rising and could reach 4.5% in 2023 before falling again.

Markets watchdog the Financial Conduct Authority has ordered lenders to offer more support to distressed borrowers facing increased payments.(see story below).

• Halifax slashed select flat rates for homebuyers by up to 0.25 percentage points and lowered the rate on its mortgage-tracking product effective Monday (March 13). The lender's five-year fixed rates were also reduced to 90% and 95% LTV. Its two-year revision to 90% LTV at a rate of £999 is reduced by 0.05 percentage points to 4.98%. The two-year follow-up mortgage customer contract (60% LTV) is reduced by 0.13 percentage points to 4.23% at a fee of £999
• Virgin Money cut rates on hire-purchase mortgages and rates on some housing companies by up to 0.45 percentage points. Its two-year BtL correction (50% LTV) is now at 4.18%, despite a hefty £3,995 fee. The same deal at 60% LTV is 4.28%. The five-year BtL fixed rate is 4.2% (50% LTV) or 4.25% (60% LTV) with the same commission. Two-year and five-year home purchases declined 0.1 percentage point, while some refinancing operations, also two-year and five-year, rose by up to 0.15 percentage point. Introducing a seven-year no-fee flat rate for retail borrowers at 4.34% (75% LTV)
• The Coventry Building Society is increasing its two-, three- and five-year fixed rates and two-year follow-up contract effective Tuesday (14 March). The increases apply to owner-tenant mortgages for new customers and existing borrowers looking to relocate or make a debt restructuring. The new rates will be announced next week.
• Clydesdale Bank, part of Virgin Money Group, has cut the interest rates charged to existing LTV customers from 65% to 75%, which will carry over to new products. Eligible customers may choose to transfer, for example, when paying a standard variable rate or when their fixed-rate contract ends. Clydesdale offers a two year correction at 4.4% with a fee of £449 and a five year correction at 4.02%, also with a fee of £499 (two years) and 4.17% (five years).

Sam Amidi, Better.co.uk online mortgage broker, said: “Halifax is one of the largest lenders in the country and is now doing the best buying deals as it doesn't make the top three. As other major lenders have been raising rates in recent days, Halifax will see this as an opportunity to gain market share.

“With next week's budget it will be interesting to see what kind of support the government intends to offer to the housing market as it has been stagnant for the past five months. With the UK narrowly avoiding a recession and talk of keeping interest rates on hold at the next MPC meeting, this could be an opportunity to revitalize the market and boost consumer confidence.”

March 10 - FCA fear 356,000 families will find themselves in trouble

The Financial Conduct Authority is urging lenders to do more to help customers struggling with mortgage payments due to rising interest rates and rising costs of living.

The regulator estimates that another 356,000 mortgage borrowers could face payment problems by the end of June 2024. This is in addition to the 200,000 families who are already experiencing financial difficulties, according to the FCA.

This is a reduced estimate compared to September 2022, when the FCA feared around 570,000 borrowers would face financial difficulties due to increases in the Bank of England's interest rate, which determines the cost of mortgages.

At the time, regulators expected the bank's interest rate to be 5.5%. But that estimate has now been lowered to 4.5%, allowing the FCA to adjust their numbers.

Payment problems are likely if borrowers give up currently low fixed-rate mortgages and have to pay their lender's much higher standard rate (known as SVR, currently averaging 6.90%) or a debt restructuring to get a higher fixed rate.

The regulator has calculated that mortgage borrowers who step down from fixed-rate contracts over the next year could end up paying an extra £340 a month on their mortgage.

The bank's interest rate currently stands at 4% after rising 0.1% in 2021. The next interest rate decision will come on March 23 when it rises to 4.25% or 4.50% as the bank tries to rein in inflation. Rate.

In its final guidance on how lenders should help mortgage borrowers, the regulator expects companies to support customers seeking help by offering a range of measures to ease the pressure to repay.

A mortgage summit will follow in December between Chancellor Jeremy Hunt, the FCA and representatives of the mortgage industry.

The FCA says options to help customers in difficulty include:

• Restructure a mortgage by extending the loan term to reduce monthly payments
• temporarily suspend monthly payments
• to offer paid leave
• Convert a loan to interest-free terms.

Concerned mortgage borrowers should contact their lender as soon as possible to discuss their options. Borrowers should be aware that even temporary changes to their mortgage can result in higher payments in the future and higher payments overall.

Sheldon Mills, FCA's Executive Director for Consumers and Competition, said: "Our research shows that most people are able to pay their mortgages, but some are struggling. If you're struggling or worried about paying your mortgage, you don't have to do it alone. Your lender has a variety of tools available to help.

“Call back as soon as you have questions and don't wait until you're about to miss a payment. Simply talking to them about your options will not affect your credit score.

FCA's study found that borrowers aged 18-34 are more likely to experience financial difficulties than the rest of the working-age population and those living in London and the South East. It also found that almost half of people in trouble (47%) incorrectly believe that contacting their creditor for help would affect their creditworthiness.

If a borrower accepts an option from their lender to pay less than the amount stipulated in their contract, their credit file will be affected. But just talking to the lender doesn't affect your credit history or score or other forms of assistance.

Laura Suter, head of personal finance at investment firm AJ Bell, said: "There's no hiding the fact that the mortgage market is a scary place for 1.4million homeowners moving out of a cheap fixed-rate deal, and they're going to much higher Interest over ." this year.

“The FCA wants mortgage lenders to up their game when it comes to helping clients in difficulty. He also wants to dispel some myths by reassuring borrowers that asking for help will not negatively impact their credit scores and that lenders should offer personal assistance.”
Free government money servicemoney helper, and other free services, including Citizens Advice, provide unbiased advice on money and debt.

March 9 – Volatility reflects wholesale market trends

Fixed-rate mortgage rates remain volatile in response to fluctuations in wholesale credit markets, which strongly affect mortgage prices.describe Jo Thornhill.

Interbank rates, the rates at which banks lend to each other, rose last week, prompting lenders to reassess the mortgage rates they offer their customers.

Economists are also wondering how much more the Bank of England's interest rate (currently at 4%) should rise. The next interest rate decision is scheduled for March 23.

Among today's mortgage rate changes:

• mortgage contract,Yorkshire Building Society Property Brokers Only Lender has increased flat rates by up to 0.4 percentage points for new customers, taking effect tomorrow (10 March). Home purchase listings will rise 0.05 percentage points, while fixed rate mortgage products will rise 0.33 percentage points (at 85% LTV) and 0.4 percentage points (at 90% LTV).
• Bank Shawbrookbucked the rising trend by cutting its mortgage rates for semi-commercial and buy-to-lease (BtL) customers by as much as 1.75 percentage points. The special loan for leases between £150,000 and £1m has been cut from 8.24% to 6.29% and BtL loans over £1m are now at 5.69%. Semi-commercial mortgages over £1m now at 6.49%
• Foundation real estate loanit also cut homeowner mortgage rates by as much as 0.1 percentage point. Lender Assisted Rate Five Year Fixed Rate (65% LTV) special offer is 6.59% – This offer has a product price of £795 (lower than the standard product price of £995), a free trial with no sign-up fee.

Mar 7 - Home loan rates rise, new construction slows

Building society Skipton raised fixed rates on select home purchases and mortgage loans by up to 0.38 percentage points, while cutting rates on new homes and state mortgages by up to 0.19 percentage points.describe Jo Thornhill.

Amid rate hikes, Skipton increased the cost of its two-year flat rate contract (60% LTV) by 0.38 percentage points to 4.75%. It has a fee of £995. Its commission-free two-year flat rate (90% LTV) also rises to 5.29%, an increase of 0.13 percentage points.

However, the lender's no-charge two-year fixed rate for new homes is reduced by 0.07 percentage points to 5.73% (available up to 90% LTV).

Mortgages for government programs like Aid to Purchase and First Home are also being cut. The two-year fixed rate for co-ownership mortgages is now 5.47%, down 0.18 percentage point. This offer is available up to 90% LTV and is free.

• TBS is increasing the interest rate on its five-year fixed-rate mortgage contracts (to 85% LTV) by up to 0.2 percentage points for purchase and debt restructuring. The new five-year fixed rates for borrowers with at least 15% deposit will be available to new and existing mortgage customers starting tomorrow.
• Atom Bank, which operates an app-based service, cut fixed mortgage rates by up to 0.25 percentage points for customers who buy and refinance. It offers a free five year (60% LTV) rate of 4.29% (higher rates are available with higher LTVs) and a two year (90% LTV) rate of 5.04% with a rate of say £900. Among its offerings for near-prime borrowers (those with a lower credit rating), it has a two-year fixed rate of 6.89% (85% LTV) with an interest rate of £900, or a five-year fixed rate of 7 . 04% also with a fee of £900. Richard Harrison, head of mortgages at Atom Bank, said: "We are making rate cuts at a time when some lenders have started to pass on some of the recent increase in interbank charges to customers".

March 6: Existing customers benefit from the changeover

Virgin Money is reducing its range of fixed-rate mortgages for existing customers by up to 0.26 percentage points,describe Jo Thornhill.

The new rates, which come into effect tomorrow (7 March), are available to existing mortgage customers looking to switch to a new contract.

The five-year fixed rate (65% LTV) is among the top offerings on the market at 3.99%, down 0.16 percentage points. There is a £999 fee.

The two-year fixed rate (65% LTV) is now 4.37%, down 0.16 percentage points. The fee is £995. The two-year flat rate with no fees is reduced by 0.26 percentage points to 4.6%.

Two-, three- and five-year fixed rates for existing borrowers with a higher lending rate were also reduced by up to 0.21 percentage points.

Richard Walker, Head of Intermediate Sales at Virgin Money, said: "We don't believe our best rates should be reserved for new customers only.

"With five-year fixed rates starting at 3.99%, these changes to our existing customer base expand the options available to anyone looking for a new interest rate on their existing loan."

March 3 - "Interchange" fee increase hits customers

The National Building Society has increased interest rates on select fixed-rate and tracker mortgage products by up to 0.21 percentage points for new and existing customers, writes Jo Thornhill.

The lender is likely reacting to the recent rise in wholesale exchange rates -- the rates at which banks lend to each other that determine how lenders price their fixed-rate mortgages.

Virgin Money and HSBC have hiked rates in recent days (see stories below). This contrasts with the downward trend in mortgage interest rates on the market since the beginning of the year.

Nationwide offers a two-year solution at 4.79% (75% LTV) for first-time buyers, priced at £999. The free option is 5.24%. The two year correction for new home buyers (80% LTV) is 4.79% with a fee of £999 or 5.09% no fee.

Their five-year new customer mortgage bill (60% LTV) is now 4.19%, an increase of 0.2 percentage points. It costs £999.

Existing borrowers across the country will see higher interest rates on home movers, equity shares, add-on loans, green add-on loans, add-on commuter and commuter loan products. The five-year switch fix for existing customers (60% LTV) costs 4.04% (a 0.1 percentage point increase) with a fee of £999.

"Switcher" is Nationwide's way of referring to existing customers who are switching to a new company.

Nick Mendes, Technical Manager of Mortgages at broker John Charcol, said: “Exchange rates have risen in recent days, partly due to the turnaround in US sentiment.

“The Federal Reserve is now expected to keep interest rates high for longer and the expectation here in the UK is that the Bank of England will try to do the same. The market believes UK rates could rise to 4.25% and not fall again until 2024.

“This shows how unpredictable rates can be. Those expecting further falls in mortgage rates, including current offers below 4%, may have to wait a little longer now.

Henry Jordan, Director of Real Estate at Nationwide, said: "Over the past few months, we have continued to cut rates across our entire mortgage offering, including four times this year.

"However, due to the recent rise in exchange rates, we need to make some small increases to select mortgage rates so that we can continue to balance our support for all types of borrowers with the need to ensure our rates remain sustainable."

• the mortgage lender, part of Shawbrook Bank, cut rates on its two- and five-year fixed-rate buy-lease loans by as much as 0.4 percentage points. The commission savings for pure broker mortgage loan products is reduced by 0.4 percentage points to 5.79%. This is a free plan for five years with a 75% LTV. TML's fixed purchase rate for a five-year lease with an LTV of 75% is reduced by 0.2 percentage points to 4.64%. There is a 5% fee. Multi-family home (HMO) mortgage rates for professional homeowners have also been cut by up to 0.25 percentage points.

Feb 28 - Rising borrowing costs threaten firm deals

Skipton Building Society has become the latest lender to cut the cost of its fixed rate mortgages, its fourth rate cut this month. But HSBC is expected to hike fixed rates across its range from tomorrow, and experts believe market-wide fixed rates could start to rise again soon.

Skipton cuts rates for retail and hire-purchase customers by up to 0.24 percentage points. Offers a two-year 5.16% (90% LTV) flat fee-free interest rate for private borrowers. With an LTV of 60%, borrowers can get an interest rate of £995 for five years at 4.16%.

While some lenders continue to cut their fixed-rate offerings as market competition remains fierce, brokers say the fixed-rate cuts are likely to reverse soon.

Wholesale swap rates, the interest rates at which banks lend to each other, began to rise. This will inevitably increase the fees that lenders charge their mortgage customers.

Today (February 28) swap rates are at their highest for the year. Two-year swaps are just under 4.5%, while five-year swaps are over 4%.

According to online mortgage broker Better, the market is already reacting, with the lowest two-year fixed-rate mortgage transactions rising from 4.02% to 4.12%.

And while the lowest corrections in five years are still below 4%, some providers have adjusted their trades higher or removed their best buys in recent days to contain trading levels.(see stories below).

Starting tomorrow (March 1), HSBC will increase its standard variable rate (SVR) from 6.79% to 6.99%, and the SVR for hire-purchase customers will also increase from 6.35% to 6.85%.

The home purchase flat rate, exchange products and mortgage offers will be increased at the same time, details have yet to be announced. Brokers say they expect HSBC's five-year revision to remain at 3.99% (60% LTV).

Experts also predict that the Bank of England could raise interest rates again when the Monetary Policy Committee (MPC) meets on March 23.

Richard Campo, founder of mortgage brokerage firm Rose Capital Partners, believes that mortgage rates have entered this cycle: “Now we may be seeing the end of falling mortgage rates. We don't have a crystal ball so I'm proposing this based on my reading of money markets. But barring geopolitical or economic changes, I think even if bank rates settle at 4%, a 5-year fixed-rate mortgage at 4% seems exceptional value.

“There has been some interesting movement in money markets over the past week, fueled by sentiment that interest rates are yet to peak this cycle. This affects the price of fixed-rate mortgages. Over the longer term, I think we'll see the best five-year fixed rates around 4% to 4.5%.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: "All eyes are on not only next month's MPC decision but also the voting decisions. The hawks and doves are already voicing their thoughts. When the market feels the tide has turned and bank rates have peaked, you should expect swap rates to drop quickly.

“While not all lenders are fully dependent on money markets and exchange rates for their creditworthiness, they will still affect your pricing. Even financially strong lenders will keep tabs on the movements and actions of competitors to maintain service levels.

“Borrowers cannot expect fixed rates to fall further. As we saw last week, the best deal can disappear as quickly as it appears."

Feb 27 - Lenders compete for deals with lower rates withdrawn

More and more lenders have lowered rates on fixed-rate mortgages as competition remains fierce.describe Jo Thornhill.

• The Newcastle Building Society has cut five-year fixed rates on 90% and 95% LTV mortgages by up to 0.79 percentage points. With an LTV of 90%, it offers a five-year fixed rate of 4.8% and with an LTV of 95%, the rate is 5.25%. Both offers apply to purchase and mortgage customers
• The Mortgage Works, the specialist lending arm of Nationwide's building society, cut rates on five-year fixed contracts by up to 0.1 percentage point for existing customers. Its five-year fixed income Switch product is now at 5.09% (75% LTV) at a 3% rate. The rate and the five-year rate are the same for professional homeowners with multi-family home mortgages (HMO) and large HMO borrowers
• Buy-to-rent lender Zephyr Homeloans has cut its five-year fixed-rate contracts by 0.3 percentage points. The standard five-year rate is 5.29% (65% LTV). This applies to properties with an A to C energy rating. Zephyr's new home and apartment bid over retail has also been reduced to 5.29% (65% LTV) and its multi-family multifamily bid is now 5.59 % (65% LTV).

These latest cuts follow rate increases over the past week by some lenders offering the most expensive five-year fixed rates of under 4%.

Virgin Money and Platform, part of Co-operative Bank, offered five-year fixed rates of 3.95% and 3.75%, respectively, the cheapest on the market. But Platform withdrew its deal and Virgin increased its rate to 3.99%.

The next decision on the Bank of England's interest rate, which currently stands at 4%, will come on March 23rd.

February 24 - 50% LTV tier allows fee reduction

Coventry for Intermediaries, the brokerage arm of the Coventry Building Society, is reducing selected residential rates by up to 23 percentage points. Also launched 50% LTV products for new and existing customers.

Flat rate products for existing rental customers have also been reduced by up to 70 percentage points.

The building society now has a five-year flat rate offer for customers with an LTV of 50%, joining the growing list of offers below 4%.(see stories below)with a commission of 3.96%, although there is a commission of £999.

Available for both home buying and debt restructuring, this offer gives you the option of a £350 refund or debt restructuring transfer service.

Its two-year fixed rate trades at 4.62% with an LTV of 85% and an interest rate of £999 available for home purchases and mortgages.

February 23 - Lenders continue to cut interest rates

Searching for mortgage rates online is up more than 500% in the year to November 2022, with borrowers looking for information and security as interest rates soar.describe Jo Thornhill.

The discoveries of the runnerBetter.co.uk, show that Google searches for “mortgage rates” averaged about 110,000 per month over the 12-month period and increased by more than 230% in the three months ended November 2022.

Home price searches have also increased by 172% over the past year.

Better's study also highlights the impact of the cost-of-living crisis, as Google searches for utility bill information increased by 819% over the year.

The survey comes as lenders across the market continue to tighten fixed rates:

• Bank ClydesdalemiYorkshire-Bank, brands that are part of banking group Virgin Money, followed parent company Virgin by raising flat rates for new customers by as much as 0.09 percentage point from tonight (23 February). Both brands offer a free two-year purchase or refinancing rate of 5.33% (85% LTV), an increase of 0.04 percentage points. Buy-to-let rates will also be increased. There is a 2-year BTL flat rate of 5.32% (60% LTV), up to 0.09 percentage points, with a fee of £999, or a 2-year flat rate of 5.09% (60% LTV) up to 0.05 Percentage points with a fee of £1,999. Interest rates have also been adjusted upwards for existing borrowers looking to take out a new mortgage. The five-year revision to 90% LTV is increased by 0.04 percentage points to 4.98%
• AldermoreLower interest rates by up to 1.34 percentage points on mortgage loans for homeowners and by up to 0.75 percentage points for buy-to-let customers. For private borrowers it offers a five year fixed rate of 5.74% (80% LTV) with an interest rate of £999. Homeowners who are buying a property to let can get a five year fixed rate of 5.54% (75% LTV) at a rate of 1.5% – or the rate drops to 5.44% for properties with an Energy Performance Certificate (EPC) of A, B or C
• square stone, the hire-purchase lender, has launched a new range of offers with lower rates but a higher 5% setup fee. Offers a five-year fixed rate of 5.29% (65% LTV) or 5.39% (75% LTV). For multi-family dwellings (HMO), rates start at 5.54% (65% LTV).
• wet cropsFixed interest rates cut by up to 0.31 percentage points on home purchase contracts and lease loans from tomorrow (Friday 23 February). Two-year and five-year fixed rates for buyer customers are reduced by 0.16 percentage points and 0.11 percentage points, respectively. It offers a two-year flat rate for paid customers at 4.58% (60% LTV) with a fee of £995 with a fee of £995 (a reduction of 0.31 percentage points).

February 22: Big Guns compete for market share

HSBC and Skipton Building Society have cut their fixed mortgage rates in the latest salvo in an increasingly competitive market.describe Jo Thornhill.

• HSBCit lowered interest rates for its fixed-rate mortgage products for new and existing customers by up to 0.35 percentage points. It is the bank's fourth rate cut this year. Three-year fixed rates start at 4.29% (60% LTV) with a fee of £999. A 10-year fixed rate offer has also been added to the range at under 4% at 3.89% (at 60% LTV), which is on top of his current five-year retention at 3.99% (60% LTV). Both offers below 4% have a fee of £999
• SkiptonThe building society cut rates on its home and hire-to-own mortgages by up to 0.31 percentage points and increased its maximum home loan amount from £1m to £3m (up to 75% LTV). It offers a free five-year fixed rate of 4.35% (60% LTV). Their two-year fees start at 4.54% (75% LTV) with a fee of £995
• Nice mortgages, the exclusive buy-for-lease lender to brokers, has introduced a two-year fixed rate agreement for standard and limited partnership borrowers of 5.69%. Mortgages for apartment buildings and apartment buildings are available from 5.79%. Loans are available up to an LTV of 75% with an interest rate of 2%. Five-year agreements starting at 4.79% with a rate of 5% were also disclosed. Fleet cut rates on its seven-year fixed-rate mortgages earlier this month.
• A mortgage works, the national building society's buy-to-lease lender, cut selected fixed rates by up to 0.3 percentage points. Offers a five-year corporate borrower buyout solution capped at 4.99% with a 3% interest rate (75% LTV). Multi family home (HMO) owners can get a five-year fixed rate of 4.59% with a 3% interest rate (75% LTV), and borrowers who own and rent multiple HMO properties can get a five-year fixed rate of 4.99% an interest rate of 3% (also 75% LTV).

February 21 – Lender accepts rate cut trend

Virgin Money has launched a range of fixed rate mortgage offers for first time home buyers and those looking to relocate. But while the new products include cash-back incentives and free trials, the rates represent an increase of up to 0.26 percentage points over Virgin's previous flat-rate offerings.describe Jo Thornhill.

It comes a day after the lender hiked rates by as much as 0.25 percentage points for retail mortgage customers.(see stories below).Virgin also cut rental rates by up to 1.5 percentage points.

Virgin's two-year flat rate for home shopping customers at 75% LTV is 4.78%, up 0.15 percentage points from the previous product. There's a £995 fee, but the offer gets you £1,000 cashback and a free trial.

With an LTV of 90%, the two-year fixed rate is 0.26 percentage points higher at 5.25%.

Interest rates are lower for borrowers who opt for a higher introductory rate and Virgin offers a two-year fixed rate of 4.49% (75% LTV) or 4.9% (90% LTV) with a fee of £1495.

Richard Walker, Virgin's Head of Intermediate Sales, said: "Our new range of exclusive short-term tariffs offers even more choice for those looking to buy a new home, whether they're moving or buying for the first time.

"We continue to support those with smaller deposits with flat rates of 90% two-year LTV, starting at 4.90%."
For buy-to-let borrowers, Virgin offers a five-year fixed rate mortgage loan at 4.64% (50% LTV) with a fee of £3,995 for "portfolio" owners (those who own and lease multiple properties). Two-year rates start at 4.73% (50% LTV).

February 21: Competition keeps fixed rates strong

Mortgage experts say fixed rate offers below 4% are not going away, despite the recent increase in the cost for lenders to provide fixed rates to customers.describe Jo Thornhill.

Wholesale swap rates, the interest rates at which banks lend to each other, have changed significantly over the past few days. This is the rate at which mortgage lenders are required to borrow money and then lend it to their mortgage customers.

Lenders add their own margin on top of that, so when exchange rates rise, so does the mortgage interest paid by homeowners.

The recent increase in interbank fees is one of the reasons behind Virgin Money's hike on fixed mortgage rates yesterday (see report below). But despite the move, which bucked the trend of last month when fixed-rate mortgage rates fell across the market, brokers are confident that intense competition will keep mortgage prices low.

Virgin has kept its five-year flat rate below 4%. Other lenders, including First Direct, Halifax, Nationwide, NatWest, Santander and the Yorkshire Building Society, have five- and 10-year fixed rate contracts below the Bank of England's base rate (4%).

Yesterday Platform, part of the Co-operative Bank, has launched a market-leading five-year solution at 3.75%, although it's only available at a 60% LTV with a high interest rate of £1999 and a minimum mortgage of £400,000.

The broker-only platform offers other five-year fixed rate options of 3.85% (60% LTV) with a fee of £1,499 or 3.89% with a fee of £999, for example.

Tessa Skot, COO des Online-BrokersBetter.co.ukHe said: "There is no need to panic, not all lenders want to make similar adjustments to Virgin Money.

“Virgin is likely to be more conservative than other lenders in response to exchange rate movement and is also committed to maintaining prompt service levels in response to increased customer demand.

“We often see that when a lender receives a high volume of applications, they temporarily increase fees on new applications to maintain the level of service customers expect for applications already received. When these requests have been processed, the lender will usually lower the interest rates again.

Mark Harris, CEO of mortgage broker SPF Private Clients, has this advice for borrowers looking for new business: "While the overall trend for fixed-rate mortgages has been down for the past few weeks, we expect rates to rise, and in the next few six months with no discernible trend.

“Borrowers might be tempted to wait for interest rates to fall, but the risk is that they won't. One possible option would be a base rate tracking mortgage with no upfront fees, allowing you to switch to a fixed rate if rates continue to fall.

"Another option would be to take out a two-year fixed-rate mortgage to end up with a long-term solution, hoping it can be cheaper."

Figures released today by HM Revenue and Customs also show how higher mortgage rates are affecting the property market.

Stamp duty revenue data shows that there were 77,390 home sales in January, down 7% year-on-year and down 27% from December 2022. Non-residential property sales saw 8,500 transactions, down 11% year-on-year, or a monthly decline of 3%.

Gareth Lewis, commercial director at real estate 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 should be.

“We have yet to find a way to stimulate the market and allow more people to buy property as many struggle with affordability. There is no easy solution, but something must be done to enable more people to reach the bottom rung of the ladder.

"It makes sense that January transactions are lower than December transactions and we expect a downward trend in the coming months."

20 February - Virgin raises the cost of refinancing operations

Virgin Money has hiked rates on its range of fixed rate mortgage loans by as much as 0.25 percentage point as costs in the broader mortgage market come down.describe Jo Thornhill.

Tonight at 20:00, Virgin's two-year flat rates are up 0.2 percentage points to 4.79% (65% loan-to-value) and 4.89% (75% LTV). No agreement charges a processing fee.

Virgin's three-year fixed rate will rise 0.25 percentage points to 4.59% (75% LTV).

The lender's five-year fixed rate will also increase by 0.04 percentage points to 3.99% (65% LTV) with an interest rate of £995.

However, Virgin is still among a small group of lenders offering five-year fixed rates below 4%. These include First Direct, HSBC, Santander and the Yorkshire Building Society.

February 20: 5-year correction below 4% available

Santander has lowered its fixed-rate mortgage rates and is offering a five-year fixed-rate arrangement at 3.99%, bringing five-year fixed rates below 4%, like many other lenders.describe Jo Thornhill.

Available from tomorrow, the 60% LTV five-year flat rate has a rate of £999 earlier this month.

Other lenders, including HSBC, Virgin Money and Nationwide and Yorkshire Building Societies, are already offering five-year fixed rates at 3.99% (see article below).

Santander is also cutting other fixed home mortgage loan rates by up to 0.5 percentage points and buy-lease rates by up to 0.3 percentage points, starting tomorrow.

It offers a free two-year solution with a 75% LTV of 4.79% for private borrowers. It offers a two-year solution at 5.59% for buy-to-let customers who reschedule at 75% LTV for free.

Other lenders with lower interest rates are:

• country cove: Specialist buy-to-let lender Landbay has cut mortgage rates by up to 0.3 percentage points for multi-family and multi-family home owners. For standard hire-purchase properties, the rates have been reduced by up to 0.15 percentage points. Two-year fixed interest rates start at 5.29% at a two percent interest rate or 4.79% at a three percent interest rate
• Foundation real estate loan: The foundation cut home mortgage and rent rates by up to 1.5 percentage points. The lender has upgraded the rate of its Green ABC+ product for properties with an Energy Performance Certificate (EPC) of C and above. The new rate is 6.44%, below 7.89%. Buy-to-let rates fell 1.8 percentage points across the green product range. For example, five-year fixed rates, available up to an LTV of 75%, start at 6.44% with an interest rate of 1.25%.

February 15 - Homebuyers enjoy more choices in lending deals

Nationwide, the world's largest homebuilder, is adding weight to the recent spate of mortgage rate cuts, cutting the cost of its fixed and follow-up contracts by up to 0.70 percentage points.describe Laura Howard.

Starting tomorrow (February 16), the acquisition costs for five-year fixed-rate mortgages nationwide will be reduced by 0.19 percentage points to 3.99 percent.

The move brings it in line with rivals Virgin Money, Yorkshire Building Society and First Direct, which have already offered discounts below 4% for five years.(see stories below).

The new five-year solution, available with a 40% deposit, comes with a fee of £999, although a no-fee option is available priced at 4.18%.

The cuts are less generous in tracking mortgages, which track movements in Bank of England interest rates (currently 4%). The cost of a two-year contract starts at 4.24% with a fee of £999 and has been reduced by just 0.05 percentage point.

Existing customers across the country looking for new business can get discounts of up to 0.41 percentage points, with rates starting at 3.94% for a five-year solution with a fee of £999.

The lender promises that "switchers" will receive rates equal to or lower than the corresponding agreement for new customers.

However, the biggest cost reductions are reserved for first-time buyers, who receive discounts of up to 0.70 percentage points on select two-, three- and five-year solutions.

From tomorrow, the first-time buyer's five-year agreement, which only requires a 5% deposit, costs 4.99% with a fee of £999. The 0.7 percentage point reduction is 5.09%.

Newcomers to Nationwide can still choose between £500 cashback or free standard legal fees.

The latest moves are the fourth round of mortgage rate cuts Nationwide announced since the beginning of the year and the ninth since last fall's mini-budget.

February 14 - 3.99% deal expands the range of side fee banking offers

First Direct cuts interest rates on fixed-rate mortgages by up to 1.05 percentage points. It also joins the ranks of lenders offering a five-year fixation below 4%, further fueling competition in this market sector.describe Jo Thornhill.

The bank says its five-year fixed rate will be 3.99% after a 25 percentage point cut (60% LTV). A fee of £490 applies.

Virgin Money, HSBC and Yorkshire Building Society offer five-year fixed rates below 4%, rates have fallen below 4% for the first time since last September.

First Direct's 10-year fixed rate was cut the most by 1.05 percentage points and is now 4.04% (60% LTV) at a rate of £490. The two-year fixed rate starts at 4.49% (60% LTV). ), also at a cost of £490. Bank mortgages are available to all new and existing customers.

Carl Watchorn, Head of Mortgages at First Direct, said: “These latest rate cuts are the most significant introduced across First Direct's entire mortgage offering since last fall. Our biggest rate cuts are in our 10-year range as we recognize that many clients are looking for long-term security right now.”

• middle HalifaxInterest rates cut by up to 0.36 percentage points for borrowers who buy and restructure starting tomorrow (February 15). It offers a 10 year flat rate through brokers at 3.99% (60% LTV) with a fee of £999. The same offer is 4.04% at 75% LTV.
• BarclaysIt reduced its two- and five-year fixed-rate mortgages for private and hire-purchase customers by up to 0.44 percentage points. It offers a two-year flat rate at 4.3% (60% LTV) with a rate of £999 or 4.75% at 75% LTV, both residential tariffs. Introducing a five-year fixed rate for buy-to-let borrowers of 4.75% (75% LTV) with an interest rate of £1,795. The bank also said it will end its buy-by-buy mortgage range starting tomorrow (February 15).
• agreement, the specialized loan arm ofYorkshire building society, fixed fees for purchase-to-rent (BTL) borrowers have been cut by as much as 0.24 percentage points as of the morning (February 15). It offers a 5% fixed price (65% LTV) for five years with a fee of £495. It has a 5.84% fixed price (75% LTV) for buying a house for two years with no fee and £500 cashback. The two-year free solution for the Rehipoteca is now 5.71% (75% LTV).

Feb 13 - The change comes as lenders continue to cut rates

Starting next month, NatWest will allow mortgage customers to overpay up to 20% of their outstanding balance per year; the previous maximum was 10%.describe Jo Thornhill.

Most lenders allow borrowers to overpay up to 10% each year.

NatWest says that for customers who overpay a lump sum by more than £1,000 it means their monthly mortgage payment will be recalculated. This will lower your monthly mortgage payments later; In fact, the overpayment benefit is calculated immediately.

For those who overpay less than that amount, their payments won't change, but it means they have a smaller balance to refinance when it comes to a new term lease.

The bank said it will write to customers with overpayments of £500 a month (or more than 8% per year) to let them know about the increase in their overpayment allowances.

Mark Harris of Brokerage SPF Private Clients said: “NatWest joins a handful of lenders allowing 20% ​​overpayments including Metro Bank and Atom Bank. The Suffolk Building Society allows up to 50% overpayments without penalty.

“But with household incomes so tight right now, it's hard to predict whether many borrowers will be able to take advantage of these increased limits even if they wanted to. For most, 10% overpayment is more than enough.

“Lifesearch Research estimated that only 7% [of borrowers] overpaid on their mortgages in the first half of 2021. But informally, overpayments are rarely made to full capacity. Considering this, it is unlikely that other lenders will do the same.

Mortgage rates also continued to fall across the market as lenders sought business. Some of the latest vendors making changes include:

• TSBReduction of fixed commissions for purchase and refinancing customers by up to 0.65 percentage points. Your two year solution at 60% LTV is now 4.54% at an interest rate of £995. At 85% LTV the interest rate is 5.34% and at 95% LTV it is 5.84%.
• the mortgage lenderReduction of apartment flat rates by up to 0.66 percentage points and gamut hire-purchase rates (flat rate and tracked businesses) by up to 0.9 percentage points.
• Hipotecas MPoweredFixed rate cuts by up to 0.7 percentage points. It offers a three-year fixed rate of 4.36% with an LTV of 60%. Your 10-year correction is now between 4.29% and 60% LTV. It follows a rate cut of up to 0.31 percentage point earlier this month.

In additional relief for mortgage borrowers, Moneyfacts reported that the number of available mortgage offers rose to 4,341 from 3,643 last month.

The latest product count surpasses 4,000 for the first time since August 2022, a positive sign of the return of stability to the market after the fall in product choice following last September's mini-budget.

The average tenor of mortgage transactions also rose to 28 days, the highest since March 2022 and a significant improvement from 15 days last month.

10 February: Santander joins the trend of cutting fixed income business

Santander and the Building Societies of Yorkshire and Skipton are among a number of lenders who have cut rates on fixed-rate mortgages in recent days.describe Jo Thornhill.

A summary of the latest fee changes includes:

• Santander: The fixed interest rates for purchase, rescheduling and new construction mortgages were reduced by up to 0.24 percentage points. The new 5-year flat purchase rate is now 4.22% at 60% LTV with a fee of £999. The 95% LTV rate is now 5.64% with no fee
• Yorkshire building society: Fixed rates reduced by up to 0.25%. It offers a five-year solution at 3.98% at a 75% LTV for mortgage customers. A fee of £1,495 applies. The five-year correction for homebuyers is 4.09%. The lender's five-year fixed rate at 90% LTV is now 4.77% with no commission and £1,000 rebate
• Skipton Building Society: Fixed fees reduced by 0.13 percentage points for transactions with high LTV. Your five year solution for mortgage customers at 80% LTV is now 4.54%. For borrowers with an LTV of 85%, the rate is 4.57%. Both offers have a fee of £995 and cashback of £250. Fixed rates for two years at 85% LTV are now 4.89% with a fee of £995
• Hipotecas MPowered: Fixed rates will be reduced by up to 0.31 percentage points for homebuyers and borrowers with two- and five-year mortgage loans. Two-year fixed interest rates start at 4.54% for home purchases and 4.39% for mortgage loans; both have a fee of £1999, although mortgage customers will receive a £500 refund on completion. The free versions start at 4.94%. Five-year fixed rates are 4.13% for mortgage loans and 4.14% for purchases
• Bluestone Mortgages: Specialist lender Bluestone, which focuses on non-standard mortgage applications, cut fixed rates on its home and buy-to-lease mortgages by as much as 0.7 percentage points.
• Hampshire Trust Bank: HTB Specialist Lender's five-year fixed rate mortgage rate fell 1.3 percentage points to 5.99%. Two-year rates start at 5.69%
• Coventry Building Society: Flat rates will be reduced by up to 0.19 percentage points for purchase and refinancing customers. It offers a five year fix at 4.16% at 65% LTV at a rate of £999. The two year fix is ​​4.37% at 65% LTV, also at a rate of £999.
• U-Bahn-Bank: Fixed interest rates for residential and hire-purchase mortgages have been lowered. For residential customers, two-year flat rates start at 60% LTV at 4.99% and 5.39% at 75% LTV. Fixed three-year rates were introduced, ranging from 4.39% to 60% LTV.

Ben Merritt, Director of Mortgages at the Yorkshire Building Society, said: "We are actively monitoring market developments and are committed to using every possible opportunity to pass on savings to help people reduce their most expensive monthly expenses.

8 February - Virgin enters into 5-year subbank interest deals with HSBC

Virgin Money cut its mortgage rates by as much as 0.51 percentage point and introduced a five-year fixed rate below 4%, while Dudley Building Society and Together also cut rates.describe Jo Thornhill.

Yesterday, HSBC announced a sub-4% five-year mortgage revision, falling below the Bank of England's current policy rate (see report below).

As the mortgage rate war rages on, here are the latest changes:

• Virgin Money has lowered flat rates across its range. Offers a fixed five-year debt conversion rate of 3.95% (a reduction of 0.25 percentage points) for brokers only and is available at a 65% LTV. There's a fee of £995. Their five-year fixed rate for buyers is 3.99% (a drop of 0.18 percentage point) at 65% LTV with a fee of £1,495. Free two-, three- and five-year flat rates for mortgage customers are discounted by up to 0.51 percentage points, starting at 4.1% at 65% LTV. All of this is available through brokers.
• The Dudley Building Society has lowered rates on discount and fixed rate offers and revamped its offering by adding expat rental and holiday home mortgages. The new offerings include a two-year fixed rate residential mortgage from 5.59% to 90% LTV and an expat residential mortgage from 5.89% to 80% LTV.
• Together, the specialist lender, which offers mortgages to borrowers who may be turned down by traditional lenders, cut fixed rates for mortgage customers by as much as 0.25 percentage points. It offers a two-year fixed rate of 8.2% and a five-year fixed rate of 7.95%. Their preliminary lending rates were even reduced by 0.14 percentage points.

Richard Walker, Virgin Money's Head of Intermediate Sales, said: "Many borrowers, including first-time buyers, are looking for a longer-term product that guarantees a fixed interest rate and consistent payment over the life of the product.

“Our new 95% LTV 5- and 10-year fixed rates offer just that and mean more prospective homeowners can jump up the real estate ladder.

"We have also expanded our range of exclusive intermediate products, including a competitive five-year fixed rate starting at 3.95%, as we continue to support many types of customers with their mortgage needs."

Feb 7 - HSBC offers 5-year deal below prime rate

HSBC has cut its fixed mortgage rates by up to 0.45 percentage points, offering a five-year deal that is below the Bank of England's 4% benchmark rate.describe Jo Thornhill.

This is the first five-year fixed rate below 4% since September 2022. The new rate is 3.99% (previously 4.29%) for mortgage customers with at least 40% equity in their place of residence. There is a £999 fee.

Offers a no-fee five-year fixed rate of 5.19% (down 0.45 percentage points) for first-time buyers with a 5% cash deposit. The two-year fixed rate for first-time buyers is now 5.84% (down 0.35 percentage point).

It's the third rate cut of the year by HSBC, which will see a reduction in nearly all fixed-rate mortgages for new and existing home borrowers. In addition, it reduced purchase transactions with the option to purchase mortgages by up to 0.3 percentage points.

The building society has reduced the flat rates for the third time this year. It fell by up to 0.75 percentage points across the range. It offers a 10-year fix at 4.34% for first-time buyers at an LTV of 75% and a rate of £999. The five-year rate for mortgage customers is 4.49%. That's at 85% LTV and also at a fee of £999.

Foundation Home Loans, a broker-only lender, cut interest rates on home and hire-purchase mortgages by as much as 0.9 percentage points. Their five-year homeowner fixed rate agreement is 6.59% with an LTV of 75% and an interest rate of £1495. Fixed rental rates now start at 5.89%.

Sam Amidi, Head of Mortgages at online broker Better.co.uk, said: "We now expect more lenders to follow HSBC. The price war is in full swing and HSBC takes the plunge by offering flat rates below 4% for five years. This is positive for the consumer and should be an encouraging sign of what the year has in store.”

See related updates below

February 6 – The number of trades available is increasing rapidly

Skipton Building Society and Gen H Mortgages are the latest lenders to slash rates on fixed-rate mortgages as an online broker reports a record month for home loan inquiries.describe Jo Thornhill.

• The Skipton Building Society cut its flat rates by as much as 0.18 percentage points. This follows a cut in fixed-rate mortgage rates of up to 0.42 percentage points over the past month. Your five-year correction to 90% LTV is now 4.6%. This offer is for mortgage customers and has a fee of £995, with a £250 refund on completion (prices valid from 7th February). The five-year correction to buy at 90% LTV is 4.83%. Again, this has a fee of £995 with a cashback of £1,000. Buy-to-let borrowers can get a two-year fixed rate of 5.3% (75% LTV with a £995 fee).
• Generation Home (Gen H mortgages) actually reduced their supply of fixed-rate mortgages by 0.42 percentage points. Your free fix for five years is 4.57% at 75% LTV. The rate reduces to 4.52% for borrowers who elect to pay a handling fee of £999. The five-year fixed rate with no fees at an LTV of 80% is 4.63%, or 4.61% with a fee of £999.

The number of mortgage offers available has increased over the last month. Around 4,350 mortgage deals are on the market, according to Moneyfacts, compared to 3,640 at the start of the year and just 2,560 since last fall's mini-budget. But it's still a lot lower than the 5,300 available exchanges in December 2021.

2 February - Rate hike expected to 4% but still painful

Borrowers on follow-up mortgages and standard variable rate contracts should increase their monthly payments after the Bank of England raised interest rates by 0.5 percentage point to 4% from 3.5% today.describe Jo Thornhill.

A homeowner with a £200,000 tracked payments mortgage over 25 years will increase their monthly payment by around £50, from £1,052 a month to £1,108. This assumes a competitive tracking rate of 0.47 percentage points above the discount rate.

A similar borrower paying the average standard variable interest rate (currently 6.7% according to our online broker partner)Better.co.uk) pays £63 more a month from £1,376 to £1,439 if the lender increases its SVR by 0.5 percentage points.

It's the 10th rate hike since December 2021 and bank rates are now at their highest levels in 15 years.

An estimated two million homeowners have variable rate plans. A borrower with a £200,000 mortgage payment that has been at the lender's standard variable rate for the past 12 months could now be paying up to £450 a month more in mortgage costs than in December 2021, when the base rate was 0.1% and sees that his monthly bill will increase from £994 in 2021 to around £1,450 now.

While competitive fixed-rate mortgage rates have fallen in recent weeks, today's rising bank rates are likely to further dampen activity in the already subdued housing market.

The annual growth rate of home prices slowed to 1.1% in January 2023 from 2.8% in December 2022, according to the latest Home Price Index from the Nationwide Building Society. Prices are down 0.6% month-on-month and down 3% since August 2022 .2% down.

Avinav Nigam from the real estate investment platform IMMO says: “Rising interest rates have a major impact on the real estate market. There is an immediate increase in mortgage costs for adjustable rate mortgage borrowers, which could lead to an increase in the supply of properties for sale, with bargaining power shifting to buyers.

“Higher interest rates coupled with rising labor and material prices are making new homes harder and more expensive to build. Many projects are on hold, reducing future supply."

Alex Lyle, managing director of London property agency Antony Roberts, said: "As this is the 10th consecutive increase and we are already working with a smaller group of buyers, this latest increase will not help the market."

The regulator, the FCA, recently released guidance for lenders on forbearance and how to help struggling mortgage borrowers. It came as figures were released estimating that around 750,000 households are at risk of defaulting on their mortgages over the next two years due to rising interest rates and rising costs.

February 1: Competition calls for cuts to attract borrowers

Aldermore cut mortgage rates for home and hire-purchase borrowers by as much as 0.97 percentage points. This is the second time the lender has cut rates this year,describe Jo Thornhill.

The bank has announced the launch of a limited series of fixed-rate owner-occupier and purchase-lease mortgages, offering a two-year fixed rate of 5.49% with a 75% loan-to-value ratio free of charge. The same fixed interest rate is also available for five years, also at 75% LTV fee-free. These agreements apply to owner-occupied mortgages.

For buy-to-lease borrowers, Aldermore has a five-year fixed rate of 5.54% with an LTV of 75% and an interest rate of 1.5%. Multi-property investors and business owners can get a five-year fixed rate of 5.44% (also 75% LTV) with an interest rate of 1.5%.

Yesterday NatWest and Virgin Money announced cuts to their mortgage rates:

• NatWest cut rates by up to 0.24 percentage points on its home mortgage business and by up to 0.12 percentage points for buy-to-let borrowers. It offers a two-year flat rate agreement for homebuyer customers at 4.93%; This deal has an LTV of 60% and no fees. It offers a free 5-year solution for purchases at 4.68% at 85% LTV. Debt restructuring offers are seeing the biggest cuts. The two-year fixed rate is reduced by 0.24 percentage points to 4.88% with an LTV of 75%. There's a £995 fee. At the same time, buy-to-let offers have been reduced by 0.12 percentage points. The lender offers customers a five-year fixed rate for debt restructuring or buyback at 5.1%, i.e. H. 75% LTV, with a fee of £1,495.

• Virgin Money cut lending rates for purchase, mortgage and hire-purchase by up to 0.2 percentage points. It's the lender's second rate cut in as many weeks. It offers a five-year fixed rate to buy customers at 4.17% with an LTV of 65%. A fee of £1,495 applies. It has a 10-year fixed debt conversion rate of 3.99% at 75% LTV at a rate of £995.3,995.

See related stories below

Jan 31 - BoE sees approvals drop in 2022

Mortgage approvals have fallen to their lowest level since May 2020, according to the latest Bank of England data.Checkout and credit information,describe Jo Thornhill.

Loans for home purchases fell to 35,000 in December last year from 46,000 in November. It was the fourth consecutive monthly drop in permits.

Excluding figures from the start of the Covid-19 pandemic and immediately after, home purchase permits are now at their lowest level since January 2009, when the figure was 32,400.

Total new car registrations fell to just £8.1bn last month from £10.2bn in November. The six-month average for monthly mortgage approvals is 62,180 valued at £14.1 billion.

Approvals to refinance (with another lender) fell from 32,600 in November to 26,100 in December last year, the lowest since January 2013 (25,800). In value terms there was a monthly decline from £6.9bn to £5.6bn.

Again, the six-month average for mortgage loans is 45,938 approvals worth £9.4bn.

The main reason for the slowdown in mortgage business was the sharp increase in mortgage rates. Bank of England figures show that the interest rate paid on new mortgages rose 0.32 percentage points to 3.67% in December.

This is the biggest monthly rise since December 2021, when the Bank of England's latest string of interest rate hikes began.

Figures compiled by an online mortgage broker for Forbes AdvisorBetter.co.ukshow that while fixed interest rates have declined steadily over the past three months, they have risen by 3.22 percentage points compared to the same period last year.

For example, according to Better, the average two-year fixed rate is now 5.12%; compared to an average of 5.65% in October last year (the highest average in 2022). But the two-year average fixed rate was 1.9% this time last year.

However, mortgage brokers say there is evidence the market is stabilizing with continued rate cuts, which should give borrowers more confidence.

Sam Amidi, Better's Head of Mortgage, said: "Obviously given the economic downturn in October we have seen registrations drop as consumers consider their next move.

“Historically, the holiday season has been a chilly time to review finances and we saw a strong reaction in early 2023 as consumer confidence recovered and lenders cut rates.

"Although we expect the base rate to rise on February 2nd, lenders are optimistic that this will have little impact on interest rates currently available and when it does there will be more competition in the market, as lenders compete on price.

“That alone should give consumers more confidence that we are entering a period of stability.

Mark Harris, managing director of mortgage broker SPF Private Clients, said: “At first glance the numbers are bleak. This is at least partly because average rates on new mortgages continue to rise significantly. As borrowers should know, this is due to a significant increase in the average interest rate paid over the past three months.

“Fortunately, the situation for borrowers has improved significantly. Lenders continue to cut fixed-rate mortgage prices, with Virgin Money cutting its five-year fixed rate to 4.17%. It won't be long before the 4% psychological barrier is broken, making corrections significantly more attractive than just a few weeks ago. "

January 26: Fall in fixed prices for specialized buy-to-rent

The Mortgage Works, the Nationwide Building Society's purchase-to-lease lender, is the latest lender to cut interest rates on its fixed-rate mortgage offering by as much as 0.5 percentage points.describe Jo Thornhill.

Your two-year fixed rate loan is now 3.99% (with an LTV of 65%). The equivalent five-year contract is 4.39%. With an LTV of 75%, two-year fixed rates start at 4.29% and five-year rates start at 4.79%. These offers are for purchase or rescheduling and all include a 3% transaction fee.

The largest reductions (0.5 percentage points) are received by homeowners with large inventories. The two-year fixed rate with no commissions (75% LTV) ranges from 6.09% to 5.59%.

On the other hand, TMW tracking mortgage rates rose by as much as 0.2 percentage point. The free two-year follow-up contract is 4.99% (65% LTV).

TMW follows a string of lenders who have reduced their fixed-rate mortgages in recent weeks as competition for new business mounts.

Daniel Clinton of The Mortgage Works said: “These latest rate cuts, implemented across a significant number of products, will bring our core two-year fixed product below four percent and show that we are doing what we need to do. . We can help homeowners manage their finances.”

See related stories below

Jan 25 - More big names cut fees

TSB and Accord, the mortgage brand of the Yorkshire Building Society, have cut rates on their mortgage ranges after following a trend of market cuts in recent weeks.describe Jo Thornhill.

• Accord cut interest rates on its buy-to-lease range by 0.17 percentage points. The new tariffs will apply from January 27th. It offers a five-year flat rate of 4.97% at 60% LTV for home purchases, although there's a maximum rate of £1,995. The deal pays out £500 in cash. At the same rate, there is a two-year correction to 4.9% (60% LTV). At 75%, LTV rates start at 5.35% for a two-year agreement (£1,495 fee and £500 repayment) for mortgage customers, or 5.39% for five years free.

• TSB will cut rates on its home mortgage offering by up to 1.8 percentage points starting Jan. 27. It will also lower interest rates by up to 1.55 percentage points on its line of equity and co-ownership fixed-rate mortgages and by up to 0.8 percentage points on its buy-to-let fixed rates. Three-year fixed rates (which have been reduced by 1.8 percentage points) start at 4.64% at 60% LTV with a rate of 995.0.4 percentage points) at 60% LTV with a rate of £995,995.

January 23 - Halifax joins list of lenders renewing loan offers

More lenders have cut mortgage rates as competition for deals remains fierce,describe Jo Thornhill.

Our roundup of the latest mortgage rate changes includes:

• Halifax interest rates have been cut by as much as 0.2 percentage point and the lender has added three-year fixed rates to its offering. Three year fixed rates start at 4.68% free (60% LTV) or 4.5% with a fee of £999. Five year fixed rates start at 4.46% free (60% LTV) or between 4.86% and 90% LTV . There is also a 10-year fixed salary. Interest rates start at 4.15% for borrowers with a 40% deposit or equity in their home.
• Lender Virgin Money has cut interest rates on its mortgage offering by as much as 0.59%. Its exclusive brokerage operations see some of the biggest cuts, with a two-year fixed-rate mortgage deal now priced at 4.6% (65% LTV). Five-year fixed rates start at 4.28% (65% LTV) or 4.7% at 95% LTV, both priced at £1,495.
• Landbay, a buy-to-lease lender, cut interest rates on its five-year fixed-rate contracts by as much as 0.3 percentage points. Prices start at 4.29% at 55% LTV. Landbay charges a percentage product fee between 2% and 7%. It also offers a five-year fixed rate for borrowers at 75% LTV of 5.39% to 2% or 4.79% to 5%.

January 19: Committed Transactions up about 5%

Mortgage rates continue to fall, good news for borrowersdescribe Jo Thornhill.Here's our current rundown of the changes:

• The National Building Society cut mortgage rates (fixed and trailing) for the second time this month, this time by up to 0.2 percentage points, effective Friday, January 20. It follows a cut of up to 0.6 percentage points from its Jan. 6 range. First-time buyers now get a five-year fixed rate of 4.69% free at 85% of the loan amount (this rate has been reduced by 0.15%). Remortgage customers can get a two-year follow-up agreement at 3.84% at a rate of £999 at 60% LTV (reduced by 0.2%).
• Home builder Skipton cut its two- and five-year fixed rate contracts by as much as 0.42 percentage point. Now offering a 95% LTV five year fixed rate offer at 5.03% priced at £495 for purchase only and a 60% LTV two year fixed rate offer at 4.75% for a fee. from £995. and £250 cashback for purchase and mortgages. The lender also reintroduced its 85% loan-to-value ratio (LTV) after withdrawing it last September.
• NatWest reduced its fees by up to 0.1 percentage points for its mortgage offering and by up to 0.06 percentage points for existing customers. This is followed by cuts of up to 0.72 percentage points earlier this month. It has a two-year fixed rate of 5.08% for mortgage customers at 60% LTV. Five-year equivalent fixed interest rates start at 4.28%.
• MPowered Mortgages, which is available through brokers, reduced its fixed rate spread by as much as 0.27 percentage points. The five-year fixed rate is 4.41% for borrowers with an LTV of 60%. It has a three-year fixed rate of 4.54% at 60% LTV; Both offerings are priced at £999.
• Keystone Property Finance, a buy-to-let lender, slashed its standard offerings for fixed-rate and vacation mortgages by up to 0.2 percentage points. It offers a five-year fixed rate of 5.64% with a payout rate of 4%, or 5.89% with a rate less than 3%. Both products have an LTV of 65%.

You can read more about itMortgage rates can be found here.

January 17: Trend reflects optimism about rate hikes

Lenders continue to dig into your fixed-rate mortgage business as competition returns to the market.describe Jo Thornhill.

A summary of the latest lenders with the lowest interest rates includes:

• HSBC: Mortgage rates have been reduced by up to 0.15 percentage points and hire-purchase offers by up to 0.1 percentage points. New offerings include a 90% loan assessing the five-year fixed rate with no fees and a £500 rebate for first-time buyers at 4.94% (a 0.1 percentage point cut).
• Santander: Reduces fixed rate mortgage operations by up to 0.59 percentage points and tracker operations by up to 0.5 percentage points. It offers a two-year solution at 4.84% (reduced by 0.45 percentage points) for loan buyers at 60% LTV with a fee of £999. The no-fee option (also reduced by 0.45 percentage points). ) is now at 5.14%. There is a five-year 90% fee-free LTV revision of 5.09% (which has been reduced by 0.45 percentage points). The same deal with a fee of £999 was reduced by 0.3 percentage points to 4.94%. With an LTV of 95%, the five-year fee-free correction decreased 0.2 percentage points to 5.84%.
• Fleet Mortgages: Fleet, a hire-purchase-only brokerage lender, cut its fixed rates by as much as 0.2 percentage points. Five-year fixed rates now start at 5.29% for 65% LTV and 5.39% for 75% LTV. A seven-year fixed rate is available at 5.43%.
• Bluestone Mortgages: Interest rates reduced by up to 0.5 percentage points on all fixed-rate residential and purchase-lease mortgages. Interest rates now range from 7.10% fixed on the loan up to 85% LTV.
• Atom Bank is increasing the offer validity period of its refinancing and purchase products to six months. It has also launched new interest rates on its two-, three- and five-year mortgage and purchase products, with reductions of up to 0.35 percentage points across the range. For 60% LTV, the app-based bank is offering a five-year debt restructuring solution at 4.34% through 31 May 2026 (£900 fee applies). For home equity loans and LTV up to 80%, there's also a no-fee five-year fixed rate of 4.54% as of the same date.

Sam Amidi, Mortgage Director at our brokerage partnerBetter.co.ukHe said: “As [wholesale market] swap rates have fallen in recent weeks, we have seen growing confidence from lenders to cut rates.

“Despite the Bank of England's forthcoming bank rate announcement in February and expected rate hikes, lender confidence in rate cuts is a good indication of where the market is headed. While we don't expect significant price reductions, small reductions can make all the difference for the consumer."

January 13: Higher payments and deposits make ownership more difficult

Monthly mortgage payments make up a larger portion of the typical household expenses of first-time buyers.describe Laura Howard.

Monthly mortgage payments now account for 39% of a typical first-time buyer's net payment, compared to the long-term average of about 30%, according to the National Affordability Report released today.

Results are based on first-time buyer households with outstanding mortgages equal to 80% of home value.

In the context of nine rate hikes in 2022, mortgage costs soared after the disastrous mini-budget in late September, reaching their highest level since 2010.

But while financial conditions have broadly stabilized since then, nationwide said mortgage rates have not recovered to pre-mini-budget levels.

Andrew Harvey, Lenders Senior Economist, said: "The biggest change in home affordability for prospective homebuyers in the last year has been the increase in the cost of servicing the typical mortgage as a result of rising mortgage rates.

"Now, at 39% of net (net) income, this metric is well above its long-term average and close to levels seen before the financial crisis."

Mortgage rates peaked at around 6.5% last October but have fallen steadily since then. According to online mortgage broker Better.co.uk, the average cost for a two-year term is now 5.10%, or 4.72% for a five-year term.

However, interest rates are higher for mortgages with small deposits, which are more common among first-time homebuyers.

While home prices have fallen in recent months, taking a security deposit also remains a significant barrier to first-time homebuyers, Nationwide said.

A 20% down payment on a typical prime property now equates to 112% of a full-time employee's pre-tax income, a similar level to a year ago and slightly below the all-time high of 117% set in 2022.

A separate report by estate agents Hamptons, using the latest government census data, found that the number of private renters has risen by 1.12 million over the past decade, led by the poorest 10% of areas in England and Wales.

Hamptons found that about 23% of households in the bottom 10% of both nations rent their homes to individuals, up from 18% a decade ago.

Aneisha Beveridge, director of research at Hampton, said: "Growth in the private rental sector over the past decade has been driven by fewer young people buying their own homes, particularly in less affluent areas."

Jan 12: FCA fear 750,000 absentees

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).describe Jo Thornhill.

In a letter to the Treasury Select Committee, Nikhil Rathi, the regulator's chief executive, said that by June 2022, 200,000 households had already defaulted on their home loan payments.

FCA data and estimates put another 570,000 at risk of “mortgage default” over the next two years. This occurs when more than 30% of a borrower's gross household income is used to make mortgage payments.

The numbers underscore the deepening cost-of-living crisis as millions of families face the double whammy of rising interest rates and inflation that has reached levels not seen in 40 years.

This comes just days after the Office for National Statistics reported that 1.4 million households will face higher mortgage payments this year as they end their fixed-rate agreements and remortgage for a more expensive loan.

In his letter to MPs, Rathi said: “This figure [of vulnerable borrowers] is sensitive to interest rate changes and takes into account market interest rate expectations on September 23 and projected external changes in interest rates on real incomes. between 2020 and 2022.

“Specifically, we assume that all households would experience a 10% drop in their real income over this period.

"This doesn't necessarily mean vulnerable people will miss their mortgage payments, as some people may be able to cut spending or tap into savings to meet their mortgage obligations."

The gentleman. Rathi adds that any borrower experiencing financial difficulties should contact their lender to find ways to reduce or offset increases in their mortgage payments.

He said the FCA continues to work with creditors and has issued guidance for companies to be lenient and to support struggling customers.

Jan 11 – Lenders cut interest rates to lure borrowers

According to analysts at Moneyfacts, new mortgage deals have the shortest lifespan in history, with an average of just 15 days before being cancelled. This is the shortest time since records began, equal to October 2022.describe Jo Thornhill.

For comparison: Last year, mortgage offers were available for an average of 28 days.

But while this points to increased volatility in the mortgage market, which could cause difficulties for borrowers looking to secure new business, fixed-rate mortgage rates are falling.

Our mortgage partner,mejor.es, reports that two-year and five-year average fixed interest rates have declined steadily in recent weeks, falling to 5.12% and 4.72%, respectively, after 13 consecutive months of increases through November 2022.

Product selection is also showing signs of improvement after a significant drop in available offerings late last year.

According to Moneyfacts, there are currently more than 3,600 mortgage offers available; compared to the 2,258 that were on the market in October 2022. But it's still below the 5,394 listings available in January of last year.

Rachel Springall of Moneyfacts said: “While mortgageholders weigh their refinancing plans and others debate their homebuying aspirations in 2023, the cost of living crisis and inflated interest rates in recent months could be affecting mortgage intentions.

"However, fixed interest rates are expected to continue falling in the coming months to attract new business."

Jan 9 - ONS says households over a million are facing higher payments

Almost 1.5 million UK households with flat ratesMortgagesAccording to the UK's official data provider, they will face significantly higher borrowing costs when renewing their home loan agreements this year.Describe Andrew Michael.

The Office for National Statistics (ONS) says that 1.4 million mortgage customers who bought properties withflat rateHome loans are expected to renew their trades in 2023, when interest rates were set below 2%.

Mortgage rates have risen sharply over the last year due to an extensive series of rate hikesbank feeimposed by the Bank of England (BoE) to curb rising levelsInflation.

The interest rate, which currently stands at 3.5% and is up nine times and 3.4 percentage points since December 2021, is a key metric affecting both the cost of borrowing and the level of interest that banks and lending companies pay the savers. .

Despite the string of bank rate hikes, most fixed-rate mortgage borrowers have so far been protected from their effects by adhering to the offer dates of their home loans.

However, based on BoE data, the ONS estimates that around 353,000 fixed-rate mortgages are expected to be renewed between January and March this year. The number of fixed-rate mortgage deals due in 2023 will peak between April and June 2023 at around 371,000.

According to Moneyfacts, the average two-year fixed rate was 2.38% a year ago, but has since risen sharply to 5.79% today.

Sarah Coles, Senior Personal Finance Analyst at Hargreaves Lansdown, said: "1.4million mortgage borrowers have a fixed rate contract which will cost them an extra £250 a month by the end of the year. They are nearing the end of fixed rate contracts, which are mostly below 2% and could be as high as 6% in the future.”

"It means paying more for years or going back to a sky-high standard variable rate while waiting for rates to come down."

Gary Smith, director of financial planning at wealth management firm Evelyn Partners, said: "Families should be prepared for higher spending this year. Refinancing at significantly higher interest rates will be an important part of that for many.”

“Those whose agreements are due this year face a difficult choice between resetting or risking a floating rate agreement. The former could mean locking in a relatively high interest rate for sure. The latter could mean higher payments in the short-term, but potentially lower payments in the medium-term if benchmark interest rates stabilize or even start falling.”

For those looking for some security with payments, a two-year solution might make more sense. Because if interest rates go down over the next year or two, home loan customers could get a better deal.

An additional financial risk, however, is that those who are already paying a significant portion of their net income in mortgage costs may find themselves overwhelmed by the increased payments on their new contract. In turn, they may be forced to reduce existing savings, whether in the form of cash deposits, an individual savings account, or a pension.

"One tactic that some will resort to is negotiating a longer-term mortgage of more than 25 years, and for many this can push payments into retirement for one or both borrowers," said Evelyn's Gary Smith.

“This may be a useful measure if overpayment is planned in the coming years before retirement, or if borrowers are confident they can continue paying a mortgage after retirement without significantly impacting their standard of living. For some, this may mean postponing retirement until a later date.

Jan 6: Sleep in for borrowers as providers start slashing flat rates

Competition in the home loan market has started to intensify amid news that several high-end lenders are cutting interest rates on their fixed-line mortgage businesses.Describe Jo Thornhill.

The Nationwide Building Society, TSB and Virgin Money have all announced plans to cut mortgage rates, which will be good news for borrowers.

Mortgage brokers say they also expect more lenders to do the same as stiffer competition returns to the mortgage market. The news comes despite large hikes in the Bank of England's base rate in 2022.

The influential bank rate, which affects both borrowers and savers, currently stands at 3.5% and has risen nine times since December 2021.

Nationwide cut its fixed-rate mortgage rates by up to 0.6 percentage points for first-time buyers, movers and mortgage customers.

Rival lender TSB is cutting fixed rates on purchases and mortgage loans by as much as 1.3 percentage points starting Monday (January 9).

On the other hand, Virgin Money also lowered its flat rates by up to 0.93 percentage points. The lender has also launched a series of lease-purchase and mortgage deals for new homes.

Nationwide, one of the UK's largest lenders, is offering a five-year fixed rate of 4.43% to borrowers who refinance their property with at least 60% interest. A three-year solution for borrowers with 20% equity in their home costs 4.99%.

First-time buyers with a 15% cash deposit can lock in a two-year fixed rate of 5.09% or 4.84% for five years with Nationwide.

Sam Amidi, head of mortgages at Better Brokerage, said: “We saw less movement in mortgage rates towards the end of 2022 as most lenders hit their mortgage quota for the year. These latest moves by Nationwide, TSB and Virgin show competition is returning to the market and we expect more lenders to cut rates in the coming weeks."

January 4: The cocktail of factors records the lowest readings since the pandemic

The number of approved home purchase mortgages fell to 46,100 in November from 57,900 in October.

It is the lowest level since June 2020 (40,500) when the housing market stalled during the Covid pandemic.

Restructuring approvals, defined as moving to another lender, fell to 32,500 in November from 51,300 in October. That's down from the previous six-month average of 48,100.

Figures from the Bank of England's latest Treasury and Credit report are evidence of a weakened property market due to rising borrowing costs, falling house prices and the negative side effects of last September's UK mini-budget under the then Foreign Secretary. Kwasi Kwarteng.

Alice Haine, Personal Finance Analyst at investment platform Bestinvest, commented: “The fall in mortgage and refinancing approvals in November is not surprising given the catalog of challenges facing the housing market, with higher borrowing costs, double digit numbers and declining real wages Impact on affordability. for both first-time homebuyers and those seeking refinance.”

The numbers also reflect that many homebuyers failed affordability checks or struggled to get a mortgage after a number of large lenders went out of business after the mini-budget, he added.

However, while mortgage approvals fell in November, individual mortgage debt rose to £4.4 billion from £3.6 billion in October, according to the Bank of England.

With nine rate hikes in 2022, the cost of mortgages has also risen. Interest paid on new loans rose 26 basis points to 3.35%, while existing mortgage rates rose 9 basis points to 2.38%.

But while the odds are against you, first-time mortgage buyers are expected to make up 53% of the property market by 2022, according to a separate study by the Yorkshire Building Society, the UK's eighth-largest mortgage lender.

The projected number of first-time buyers through 2022 will be 370,000, the second-highest annual total in 14 years.

Nitesh Patel, strategic economist at the Yorkshire Building Society, who forecast the figures, said: "Demand from first-time buyers remains strong even with property prices at record highs for most of the year and the country experiencing so much political and economic experience."

December 20: Support for first-time buyers with 5% deposit

The government has announced that its Mortgage Guarantee Scheme (MGS) will be extended by one year until the end of 2023.

Launched in April 2021, the program allows first-time buyers to purchase a home with a 5% down payment.

With average UK property values ​​well over £260,000, many first-time buyers (that's 85% of all homebuyers) are struggling to find money to pay deposits. The higher the security deposit, the more favorable the mortgage terms are as a rule.

To date, MGS has helped more than 24,000 families move up the property ladder, according to government data.

Under the scheme, the government is making financial guarantees available to mortgage lenders to enable them to mortgage 95% of the purchase price on a home worth up to £600,000, subject to normal affordability checks.

John Glen MP, Chief Secretary to the Treasury, said: “The extension of this program means thousands more families have the opportunity to benefit and it will support the market as we navigate these difficult times.

“To also help people move up the property ladder, the Government has raised the level at which first-time buyers start paying stamp duty from £300,000 to £425,000. In addition, first-time buyers can get relief on properties costing up to £625,000, compared to £500,000 previously. Both measures are limited in time until April 2025.”

State measures to promote home ownership:

• Help Buying Individual Savings Accounts (Help Buying ISA): Aimed at first-time buyers, it offers a tax-free bonus of up to £3,000.
• Lifetime ISA (LISA): A long-term savings product that helps people save for a first home or to finance a future life.
• Shared Ownership: Gives first-time home buyers the opportunity to purchase a portion (25-75%) of their home and pay rent for the remaining portion.
• First Homes – A program designed to help first-time local buyers and key workers move up the real estate ladder by listing homes at 30% of market price.

8 December - Options include fee reduction or term extension

Mortgage customers who are worried about making their payments should get guidance and support from their lender to help them get through the cost of living crisis, the Financial Conduct Authority says.

The regulator wants banks and building societies to provide support and tailored measures, including:

• temporarily lower the interest rate
• extend the term of the mortgage to reduce monthly payments
• Conversion of the loan to an interest-only contract, either permanent or for a limited period, to reduce monthly payments again.

Each of these tactics comes at a cost. For example, any deferral of interest due results in higher payments at a later date, while an extension of the term increases the total amount paid over the life of the mortgage.

In addition, extending the term beyond retirement age may not be possible if the creditor calculates that you will not be able to make the payments at that time.

Interest-only agreements (as opposed to standard mortgages with a principal rate) work by deferring payment of the principal until the end of the loan term, making them available only to those who have a reliable way of paying the full amount at the end of the term Loan. the mortgage.

Anyone who temporarily switches to pure interest rates must expect higher repayments when the short-term contract ends.

Changes to your mortgage can also affect your credit file, and prospective lenders may see that you acted out of fear of making your payments.

The regulator says anyone concerned about being able to afford their mortgage payments should contact their lender as soon as possible. Its rules mean that creditors have an obligation to treat customers fairly and provide support tailored to their circumstances.

Sheldon Mills, head of consumer and competition at the FCA, said: “Most borrowers can, and should continue to, keep up with their mortgage payments. But if you're having trouble paying your mortgage or are worried, you don't have to fight it alone. Your lender has a variety of tools available to help you, so you should contact them as soon as possible.

Lenders have until December 21 to respond to the regulator's latest guidance, which was issued after the government hosted a roundtable with the FCA, creditors and consumer representatives on Wednesday to discuss the impact of the crisis on the cost of living in the discuss mortgage market.

At the meeting, the lenders agreed to allow customers with current payments to switch to a new competitive mortgage without another affordability test (an assessment of their ability to pay).

Additional information will also be made available to help customers plan ahead when their fixed-rate mortgage contract ends.

The government also confirmed that it will facilitate access to the mortgage rate support benefit. This allows those at Universal Credit to apply for help with mortgage interest payments.

November 4 – The federal funds rate is expected to peak at 4.75% this time in 2023

The Bank of England raised interest rates by 0.75 percentage points to 3% yesterday to stave off skyrocketing inflation.describe Andrew Michael.

It is now at its highest level since 2008. But where should it go next? And what are the implications for borrowers?

The discount rate is important because it is used by banks, building societies, and other financial institutions to determine both the cost of borrowing and the returns paid on savings.

The bank cited "a very challenging outlook for the UK economy" to justify its decision. He added that he expected "the UK to be in recession for an extended period of time" and warned that consumer price inflation "will remain elevated at levels above 10% for the foreseeable future".

Financial markets reacted to the news by estimating that official interest rates would be around 4.75% next fall. Many mortgage rates are then set at a premium at that level.

The bank's decision on Thursday will immediately increase costs for around 2.2 million UK mortgage customers who have taken out adjustable rate or tracker mortgages. The latter reflect movements in bank interest rates, so borrowers experience an immediate impact on their monthly payments.

However, in comments following the announcement of the first rate hike, the bank's governor, Andrew Bailey, suggested that markets had overstated their forecasts for future rate hikes. He added that lenders would need to reflect this in their mortgage prices.

He said: “[The bank's interest rate] needs to rise less than the current price in the financial markets. This is important because it means that, for example, interest rates for new fixed-rate mortgages do not have to rise as they have in the past."

In the period of relative stability, since Chancellor of the Exchequer Jeremy Hunt reversed most of the decisions made by his predecessor Kwasi Kwarteng in his September mini-budget, fixed-rate mortgages have already begunreduce the price.

Following yesterday's move, Simon Gammon, managing partner at Knight Frank Finance, said he believes fixed income products are likely to remain stable or maybe even fall further: "A lot of fixed income products are between 5.5% and 6%%. Exchange rates, instruments used by lenders to price mortgages, are falling.

"If they continue to do this, we think many borrowers will still be able to enjoy fixed income products that start at four."

Market confidence

Paul Holland, mortgage broker at Henchurch Lane Financial Services, said: "Fixed rates have already caused the recent spike so shouldn't be pushing any further north. They are typically based on exchange rates falling now as some market confidence has been restored following the reversal of Kwasi Kwarteng and Liz Truss.”

Paul Elliott, managing director of brokerage firm Propp, said: “The key from a borrower's perspective is how the swap rate markets react to this budget rise and fall [in November]. The flat rate is still the most popular option for most people.

“But even if fixed rates fall from the October highs, we are still entering a longer period of higher rates than most borrowers have been used to over the past 15 years. This will no doubt put pressure on affordability and exacerbate the current cost of living crisis for many. Difficult times are ahead of us."

Jon Halbert, mortgage and hedging advisor at Key Financial Associates, said: “The recent rate hike is potentially killing the homebuying market and is disastrous for anyone giving up a fixed rate.

“Anyone who corrected their mortgage last year for more than 2 years, some by less than 2% and others by less than 3%, may not need to change their spending habits for now. But for households whose fixed rates are phasing out in the next few months, that could mean bad debt and even a recovery.

“Anyone who has a fixed-rate mortgage that is due to expire in the next six months and are concerned about this and the implications should speak to a mortgage broker as soon as possible. Being proactive has never been more important.”

Henchurch Lane's Paul Holland adds: “Banks' rate forecasts for next year are likely to fall to 4% to 5%. This is expected to be relatively short-term, with the bank's long-term target rate at 2.5%.

“That means anyone looking at a new mortgage rate for next year, whether it's a purchase or an extension, is likely to be paying quite a bit more than they've been used to for a while.

“Some of the discussions we are having with clients include interest rate tracking options, as well as longer mortgage terms and interest-free products, if feasible, which should help mitigate the impact of the near-term spike.

“Budgeting and planning must be at the forefront of any consulting process. It's time people started analyzing their situation earlier than usual to make sure they don't get stuck later."

27 October - 40% may have problems with mortgage costs

According to analysts, higher interest rates could make it harder for up to 40% of homeowners to pay their mortgages next year.

Investment firm Morgan Stanley has published a joint analysis showing that 35-40% of UK mortgages will reach their original maturity in the next 12 months, leaving mortgage holders having to negotiate new deals at much higher rates.

The company predicts that mortgage rates would spread from around 6% to 4 in 10 UK households as interest rates rise along with rising energy bills. His research found that the bottom 30% of households make up the bottom 5% of the mortgage books.

In the same analysis as reported by thefinancial times, Morgan Stanley said mortgage affordability could be worse next year than it was before the global financial crisis.

However, he noted that the quality of mortgage origination is better now than before the crisis, meaning that applications from current borrowers have been more carefully screened than before 2008.

As mortgage holders anticipate painful rescheduling rates, experts are advising anyone who might be able to overpay to do so now, as it could qualify them for a lower LTV tranche on their next transaction and lower the cost of long-term interest payments.

Most mortgage lenders allow borrowers to pay up to 10% of the outstanding loan each year without penalty.

Sep 28 - Fears about higher interest rates and the fate of the pound hit credit availability

Mortgage lenders are closing deals on sterling's volatility in international currency markets and the prospect of interest rates rising to 6% next year.

Santander, Halifax, Virgin Money, Halifax and Skipton Building Society are among the top lenders to have completed mortgage deals with new customers in recent days. However, existing mortgage applications will be processed as usual.

Smaller lenders are also exiting the market, with Nottingham for Intermediaries pulling 14 companies off the shelves and re-rating a number of home and purchase mortgages.

Property companies in Scotland and Darlington are also exhibiting their flat rate products.

Jamie Lennox, Managing Director of Dimora Mortgages, said: “The future is certainly bleak with Halifax, the UK's largest lender, offering a wide range of products.

"The UK economy is on high alert and both lenders and borrowers need to be vigilant about what a rapidly changing interest rate environment looks like."

Lenders react to uncertain future price relationships. The pound's sudden fall on Monday raised fears of further inflation and the prospect that the Bank of England would respond with further rate hikes.

Last week, the bank's Monetary Policy Committee (MPC).increase in interest ratesat 2.25% for the seventh time in a row.

While the bank avoided a quick emergency rate hike this week, it said it would monitor sterling's volatility and "have no hesitation" in raising the bank's rate to curb inflation at its next meeting on November 3.

The financial turmoil follows a series of tax cuts announced by the governmentMini budget Friday, leading to uncertainty in the market regarding UK debt.

However, in an attempt to "restore orderly market conditions", the governmentannounced todayYou are making temporary purchases in the UKgovernment bondsauctioned between today (September 28) and October 14.

Outlook for borrowers

Fixed rate mortgages, the most popular type of deal among borrowers, are valued at "swap" rates, which reflect expected interest rate movements rather than current interest rates.

The cost of cheaper two- and five-year fixed-rate mortgages is now more than three times what it was a year ago, leaving borrowers looking to close or buy now with higher costs and fewer mortgages. . choose.

Mortgage lenders allow you to book your next mortgage interest up to six months in advance; So if your trade is about to expire, it may be worth contacting a free broker first.

Rising real estate pricescould mean that if you restructure your existing property, yourCredit Amount Rangeis smaller, it at least unlocks the cheapest offers out of the most expensive offers available.

read more inHow to weather the mortgage stormand calculate possible monthly payments against variable interest rates with ourmortgage calculator.

September 22: Policy rate increased to 2.25% from 1.75%

Mortgage borrowers and those trying to climb the property ladder were dealt another blow today as the Bank of England announced a seventh straight rate hike.

The 0.5 percentage point increase from 1.75% to 2.25%, agreed by the bank's Monetary Policy Committee (MPC), affects about 2.2 million households in the adjustable-rate mortgage business.

The increase increases the cost of a £400,000 mortgage by around £99 per month, the cost of a £250,000 mortgage by £62 per month, or the cost of a £150,000 mortgage by £37 per month Month.

Borrowers with interest rate tracking, which reflect bank rate movements by a set margin, will see an immediate impact on payments, while those paying standard variable interest rates (SVRs) will see the increase at the lender's discretion.

However, pressure is mounting on lenders not to pass on the full impact of the recent hike as households continue to grapple with rising living costs. Even before today's increase, the average SVR cost was 5.4%, according to Moneycomms.co.uk.

Those looking to buy for the first time will have an even harder time demonstrating affordability against lenders' most expensive mortgage rates.

James Turford of Even, a mortgage broker for first-time buyers, said: “There has never been a more difficult climate for first-time buyers in the UK. The combination of skyrocketing real estate prices and soaring cost of living has made it all but impossible for many looking to take the first step up the real estate ladder. ”

Mortgage offers are available for up to 95% of the property's value, while first-time buyers in England and Northern Ireland are exempt from paying stamp duty on the first £300,000. Government programs such as Help to Buy are available to bridge affordability gaps, but only for new homes.

Until the inflation rate cools down from the current 9.9% (the government's target is only 2%), further rate hikes are expected. However, the Bank of England revised its forecast for peak inflation to 11% in October from 13% at the end of the year.

You can't do anything about rising interest rates, but even with a fixed-rate contract, it is possible to reserve mortgage interest for your current home up to six months in advance.

Use our real-time mortgage tables to find out what types of mortgage rates are available for your needs and circumstances.

1 August - Suspension of lenders' "stress tests" eases mortgage affordability

The rules for potential mortgage borrowers have been relaxed from today as lenders will no longer have to carry out additional affordability tests.

Under Bank of England rules, banks and building societies had to calculate whether potential borrowers could pay their mortgages if the offered interest rate increased by 3 percentage points over the first five years of the loan.

The rules were introduced by the Bank of England in 2014 and revised in 2017. However, interest rates only rose by a maximum of 0.5 percentage point between 2017 and 2021, raising concerns that the 3% increase in the "stress test" was too high.

Lenders will now base their calculations on expected interest rates, although these must include a minimum "stress buffer" of at least 1 percentage point above the borrower's original mortgage rate.

However, Paul Johnson, head of mortgages at St James's Place, said the cancellation of the stress test "won't have a major impact on lender affordability calculations as they have to account for increases in utility bills".

Energy costs are expected to increaseup to £3,500 per year in October for a typical dual-fuel household.

Currently pegged at 1.25%, some analysts expect interest rates to rise to 1.75% when the Bank of England announces its next decision on Thursday.

July 8 - First Direct launches 10-year plan with unlimited overpayments

First Direct today launched a new 10-year fixed-rate mortgage in response to growing demand for greater security in home financing.

Borrowers can make an unlimited number of overpayments without penalty during the fixed rate term. Lenders generally limit overpayments on fixed rate agreements to 10% of the outstanding loan per year.

Mortgage rates, which have a maximum loan limit of £550,000, range from 3.34% to 3.69%, depending on the size of your deposit.

For example, borrowers with a minimum deposit of 20% pay 3.59% with a product fee of £490, or the slightly higher rate of 3.69% for the no-fee option.

The mortgage is available to first-time buyers, homeowners, mortgage borrowers and those looking for additional loans, while loan terms can be extended up to 40 years.

First Direct joins a host of other lenders offering 10-year fixed-rate mortgages, including Halifax, TSB and Lloyds, as demand for long-term financial security grows.

Öcost of livingis rising with annual inflation at 9.1% on the year to May, while Bank of England interest rates have quintupled since December to 1.25% from 0.1% now.

Chris Pitt, managing director of First Direct, said: "The cost of living crisis in particular has forced homeowners and potential buyers to rebalance their monthly inflows and outflows, of which mortgage payments typically make up the largest part.

"Following a series of interest rate hikes in 2022, the launch of this product aims to provide peace of mind for long-term homeowners and buyers while external volatilities such as rising house prices and rising utility bills show no sign of abating."

First Direct also offers two- and five-year fixed-rate mortgages. It also introduced a 5 percent deposit mortgage in April of that year.

June 24: Initial mortgage offerings launched under Capital Building Assistance loan program

This means that the payments are interest-free for the first five years. In the sixth year, 1.75% interest is charged. Reimbursements increase each April based on the cost of CPI inflation measurement (measured in the previous September) plus 2%. The CPI is currently at a 40-year high of 9.1%.

Borrowers can repay the loan at any time after construction is complete, but must repay it in full at the end of the mortgage term or when the home is sold, whichever comes first.

Because this is a home equity loan, the amount owed grows in proportion to the value of the property. This means that when real estate prices rise, you pay back more than you originally borrowed.

The Build Help Home Equity Loan is not exclusive to first-time homebuyers, but you must be the sole resident of the newly built home to be eligible. It is not possible to upgrade a house you already live in. Finally, before you can apply, you need planning permission for the property you intend to build on.

June 23 - Cost-of-living crisis means a fifth of homeowners are struggling to pay their mortgage

A fifth (20%) of UK homeowners say they are unsure how they will pay their next mortgage payment, according to a recent survey by our online mortgage broker partner.braguero.

The online survey collected responses from 2,000 homeowners across the UK in May 2022. It also found that 38% of respondents were worried about paying their mortgages amid the crisis.Cost of Living Crisis.

Amanda Aumonier, Trussle's head of mortgages, says homeowners should consider a debt restructuring. According to Trussle's research, this could save families up to £4,000 a year compared to a standard variable rate mortgage (SVR).

According to Trussle, around 800,000 UK homeowners currently have an SVR mortgage and only 10% of homeowners have assessed their ability to reschedule.

Ms Aumonier said: "Homeowners are facing a perfect storm of challenges that are taking their finances to the brink. This has left many deeply concerned about how to continue paying their monthly bills and surviving.

“However, we appeal to people not to simply bury their heads in the sand when it comes to household finances. There are a variety of actions, from renegotiating mortgages to securing a long-term deal, that can help provide stability and security."

Althoughinterest rates have risen, fixed-rate mortgage rates remain competitive, and the gap between the cost of short-term and long-term deals is closing. Trussle found a difference of just 0.45% between average interest rates on two-year and ten-year fixed-rate mortgages in June 2022.

June 20: Potential borrowers are subjected to less stringent scrutiny

The Bank of England (BoE) is withdrawing its mortgage affordability test effective August 1st.

The portability test was introduced in 2014 and revised in 2017. It specifies a "stress rate" that is used to calculate whether potential borrowers would be able to make their payments if their interest rate was 3 percentage points higher than the original rate for the first five years. the mortgage

However, real interest rates increased by no more than 0.5 percentage point between 2017 and 2021, raising concerns that this 3% increase in the stress rate was too high. Instead, lenders will base their "stress test" on expected interest rates, although this must include a minimum "stress buffer" of at least 1 percentage point above the original mortgage rate.

The move was welcomed by Lawrence Bowles, director of real estate research at Savills: “The lifting of the current stress test 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.”

Eliminating the test should make it less burdensome for potential borrowers to prove their ability to make future mortgage payments. However, rising home prices and rising interest rates are likely to continue to weigh on mortgage applicants.

the latestRightmove-Preisindexshowed a sustained, albeit more moderate, increase in property prices over the past month. According to Bowles, the BoE's announcement "should offer welcome relief to some potential buyers who are struggling to keep up with the current criteria due to significant price increases over the past two years".

Lenders must now assess affordability, referring to established market rules for “responsible lending,” which include setting a maximum loan based on a multiple of an applicant's income and analyzing existing expenses. Lenders will continue to be limited by the number of mortgages they can offer with credit-to-income ratios of 4.5 and above.

The ad appears on a background ofincrease in interest rates, with the BoE raising interest rates for the fifth straight week last week. Further rate hikes should dampen rising inflation in the UK, indirectly affecting mortgage rates and the affordability of new mortgages.

Bowles added that "improved growth capacity would also depend on lenders' willingness to increase loan-to-income ratios under responsible lending rules." However, he thinks it is "unlikely for the mortgage floodgates to open."

June 16: Rate hike to 1.25% increases cost of living

Our mortgage expert Laura Howard says today's decision by the Bank of England to raise the UK interest rate to 1.25% will be bad news for homeowners and potential buyers in the country.

“While widely expected, this latest surge is sobering news for the millions of mortgage holders across the country who are already grappling with the relentless rise in the cost of essential items such as utility bills, energy, fuel and even paying or not paying can purchases in the supermarket.

“Anyone paying the standard adjustable rate (SVR) home loan or engaged in a bank rate-linked mortgage business will be forced to take a hit almost immediately from today's increase in the cost of their monthly payments.

“For example, the latest 0.25 percentage point increase adds about £26 to the monthly cost of a £200,000 adjustable rate mortgage at a rate of 2.5%. But the cumulative increases since December 2021, when the base rate was at a much lower 0.1%, have increased the same mortgage by more than £100 a month. That's over £1,200 a year.

“First-time homebuyers and those looking to get a new mortgage are likely to find that today's surge, and those that preceded it, have already factored in the cost of new mortgages, while homeowners are in the midst of a low-rate fixed-rate mortgage for now protected from rate hikes.

“But when the firm agreement ends, they will face much higher mortgage costs.

“With that in mind, it might be worth booking your next mortgage offer for your current home, which you can typically do three to six months in advance. Basically, that means keeping interest rates where they are today and capitalizing on them later in the year if they've risen since then.

"There's no obligation to take the deal, so there's nothing to lose if you change your mind."

June 14 – Supply adjustment doubles “lowest rated” mortgage rejections.

The number of mortgage applications rejected because a lender thought a property was not worth the amount the applicant wanted to borrow has doubled since the Covid-19 pandemic.

"Negative appraisals," where there is a discrepancy between the agreed selling price of a property and the appraisal prepared on behalf of a mortgage lender, can cause serious problems for mortgage applications.

For example, a borrower may agree to a sale price of £350,000 with a property owner only to find that the mortgage lender values ​​the property at only £300,000 and refuses his claim.

As demand outstrips supply in the real estate market, buyers are becoming more willing to pay for properties, leading to an increase in negative reviews, according to online mortgage broker Mojo Mortgages.

“Sellers try their luck”

His research shows that the negative rating rate was 12.8% in April, up from 10.4% a year earlier and double the mid-pandemic rate of 6.4% in December 2020.

Negative ratings on new mortgages were the highest in April at 15.4%.

Richard Hayes, Co-Founder and CEO of Mojo Mortgages, said: “The real estate market has seen unprecedented demand over the last two years, with record price increases month after month.

“I think this high demand means that some sellers are trying their luck and asking for a sale price that is higher than what real estate agents are recommending. Since some properties like three bedroom homes are in high demand, sellers are trying to see what they can get.

"With the supply of new build housing on the market still well below demand, buyers are also willing to pay more for a property given the lack of similar alternatives."

Dealing with a negative review

Buyers faced with negative reviews may renegotiate the sale price with sellers, especially if the sellers themselves are in the market for a new property and are betting on the sale to fund their next purchase.

Some lenders also allow appeals against negative valuation decisions, but require strong evidence of the selling prices of other properties in the same area in order to change their decision.

It could also be that someone at your desk performed an assessment remotely. It may be worth asking for a personal assessment to reassess anything you think you've missed.

Each lender handles reviews differently. Another lender, using another expert, may provide an estimate that is closer to the agreed sale price.

Or, if you can increase your down payment, you can bridge the gap between the lender's estimate and the selling price.

Alternatively, you can talk to your lender about a higher Loan-to-Value (LTV) ratio, i.e. H. the amount you are willing to borrow in relation to the value of the property. However, keep in mind that higher LTVs generally mean higher interest rates and more expensive monthly payments.

Halifax numbers averaged earlier this weekhouse pricesgrew 10.5% in the year to May to £289,099. Prices have risen 1% since April, marking the 11th consecutive month of price increases, partly due to the imbalance between supply and demand in the property market.

April 27: First Direct introduces 95% mortgage

First Direct has launched its first mortgage with a 95% loan-to-value (LTV) for first-time buyers and movers.

Borrowers with a 5% deposit can choose between a two-year and five-year fixed rate, priced at 2.79% and 2.94% respectively. Both options are free. The deal is available for loans of up to £550,000, meaning buyers can borrow up to £522,500 if they have a deposit of £27,500.

It is not available to remortgagers.

press first step

In a further attempt to ease affordability constraints, the 95% Direct First Mortgage is available with a payback period of up to 40 years. However, it also allows for unlimited overpayments to be made at any time, allowing borrowers to shorten that term without penalty.

First Direct Chief Executive Officer Chris Pitt said: “As the housing market continues to accelerate into the fast lane, first-time buyers have been left behind. As home prices continue to outpace deposits, we see this as a viable way to help people move up the ladder."

The mortgages also come with a six-month agreement in principle (AIP), compared to the industry average of two to three months.

What other lenders offer 95% mortgages?

There are currently 56 mortgages available with a 95% LTVTrussle Online-Hypothekenmakler. This is a significant increase from 2020 as companies have all but disappeared from the market during the pandemic due to affordability issues.

In March 2021, the government launched a new oneMortgage Guarantee Regimeto encourage lenders to resume offering high loan-to-value mortgages.

Lenders offering 95% LTV mortgages include Barclays, Santander, HSBC, NatWest, Skipton Building Society and Clydesdale Bank.

How do I compare First Direct offers?

First Direct offers compare well to other 95% offers, which carry higher interest rates than lower-LTV mortgages due to higher credit risk.

Barclays has a two-year fixed-rate mortgage priced at 2.67% for free, slightly cheaper than First Direct's two-year contract at 2.79%. However, as part of the government's mortgage guarantee scheme, Barclays' offering comes with associated caveats, e.g. B. that it cannot be used to buy new houses.

HSBC, First Direct's parent bank, offers the option of a two-year fixed rate of 2.69% with a fee of £999 or the equivalent of 2.79% no fee, while Newcastle Building Society charges £3.15% no fee. and £500 cash back.

For 5-year mortgages with a 95% fixed rate, Barclays offers the same 2.94% rate as First Direct, while HSBC's offer is slightly higher at 2.99%. Both offers are free of charge.

However, all companies except First Direct limit overpayments to 10% per year.

For current mortgage rates, enter your criteria in our mortgage tables below.

Choose an offer

It's important to take all of the considerations into account when choosing a mortgage, including fees versus the prime rate, liens, and prepayment fees.

Also look at the tracking rate the deal reverts to at expiry. That being said, many homeowners want to get a new mortgage at a different rate after their original fixed-rate period expires.

A free, independent mortgage broker like our partner Trussle will work out the numbers for you and advise you on the best deals for your situation.

Amanda Aumonier, Head of Mortgage Trading at Trussle, said: “Subprime mortgages can play a crucial role in keeping the market accessible to all by reducing the amount of deposits needed to secure a home. We hope this trend continues so everyone can strive for a home of their own.”