Most of the major mortgage lenders across the UK have chosen to keep their rates unchanged this week, as they await the Bank of England’s next interest rate announcement.
According to the latest data from Uswitch, the average interest rate for a two-year fixed mortgage remains at 4.89%. This is the same rate as last week, indicating a pause in any upward or downward adjustments.
Five-year fixed mortgage deals saw a slight increase, with the average rate now standing at 5.14%, compared to 5.09% the previous week. Though modest, this rise signals lenders are still being cautious ahead of the central bank’s upcoming decision.
All eyes are now turning towards the Bank of England, which is set to reveal its next interest rate decision on Thursday, 19 June. This base rate plays a crucial role in shaping the interest levels that mainstream lenders offer to borrowers.
In May, the Bank of England made its fourth base rate cut in recent months, lowering it from 4.5% to 4.25%. This is part of a wider trend, following last year’s peak of 5.25%. The earlier rate hikes were introduced to tackle high inflation, with a long-term goal of returning inflation to the Bank’s 2% target.
However, inflationary pressures persist. The Consumer Price Index (CPI) rose by 3.5% in the 12 months to April. This was a higher figure than expected and an increase from the previous month, adding complexity to the Bank’s next move.
Alongside tackling inflation, the Bank is also trying to safeguard the UK’s economic recovery and employment levels. These competing priorities mean any decision must strike a careful balance.
Recent data from the Office for National Statistics (ONS) has raised further concerns. The UK economy contracted by 0.3% in April—more than the 0.1% decline many economists had forecast.
Commenting on the figures, Paul Dales, Chief UK Economist at Capital Economics, said this economic dip likely won’t be enough to trigger another interest rate cut this month. However, it does increase the likelihood of a cut happening in August.
Looking ahead, financial experts say mortgage rates could fall again later this year, provided inflation data remains stable. Sarah Coles, a columnist at Yahoo Finance UK and head of personal finance at Hargreaves Lansdown, believes the outlook is cautiously optimistic.
She said: “If inflation figures don’t hold any surprises, interest rates are held, and expectations stick for two more cuts this year, we could well see rates fall again.”
Coles also advised mortgage borrowers to act quickly in the current market. With lenders adjusting rates frequently, locking in a deal at the right time could be crucial to securing better terms.
Among the lenders, NatWest was the only major bank to lower its mortgage rates this week. Most others have chosen to hold theirs steady, waiting to see how economic conditions unfold.
In a market full of uncertainty, potential homebuyers and remortgagers are being encouraged to stay informed and act fast if they spot a good deal.
With the Bank of England’s next move just days away, borrowers and lenders alike are bracing for what could be a pivotal decision in the months ahead.
HSBC mortgage deals
HSBC is currently offering a five-year fixed mortgage deal at a rate of 4.01%, which remains unchanged from the previous week. For customers who hold a Premier Standard account with the bank, this rate is slightly lower at 3.98%.
When it comes to two-year fixed options, the most competitive rate available is 3.96%, also for Premier Standard account holders. This deal comes with a product fee of £999 and, like the five-year option, the rate has stayed consistent compared to the previous week.
These rates are based on a loan-to-value (LTV) ratio of 60%. This means that buyers would need to put down a deposit of at least 40% of the property’s value in order to qualify for these more favourable terms.
For those who are unable to provide such a large deposit, HSBC also offers deals with a 95% LTV. These mortgages require only a 5% deposit, making them more accessible for first-time buyers or those with limited savings.
However, the interest rates for higher LTV deals are significantly steeper. For example, a two-year fixed mortgage at 95% LTV comes with a rate of 5.05%, while the five-year option is slightly lower at 4.89%.
The key factor behind these rate differences lies in the risk assessment carried out by lenders. Applicants with smaller deposits are considered higher risk, which means they typically face higher interest rates.
On the other hand, those who can contribute a larger deposit are viewed as more financially secure. As a result, they are eligible for lower rates, since the lender’s risk is reduced.
Ultimately, a borrower’s financial situation, credit profile, and the size of their deposit all play a role in determining the type of mortgage deal they can access.
HSBC’s range of mortgage products continues to cater to a wide variety of buyers, from those seeking lower rates with higher deposits to those looking for options with minimal upfront costs.
As the market remains steady for now, prospective homeowners are being encouraged to assess their financial position carefully to secure the most suitable and cost-effective mortgage product available to them.
NatWest mortgage deals
NatWest is currently offering a five-year fixed mortgage deal at a rate of 3.95%, accompanied by a product fee of £1,495. This marks a small but noticeable drop from last week’s rate, which stood at 3.99%.
For those considering a shorter term, the most affordable two-year fixed rate available is 3.92%. This too represents a modest decrease from the previous week, when the rate was 3.94%.
In both cases, these deals are only available to buyers who are able to put down a deposit of at least 40% of the property’s value. This translates to a 60% loan-to-value (LTV) ratio, which lenders generally favour due to the reduced financial risk involved.
These minor rate adjustments may offer some relief to borrowers looking for a more competitive deal, especially in a market where even small changes can make a significant impact on long-term repayments.
Santander mortgage deals
Santander is currently offering a five-year fixed mortgage deal at a rate of 4.08% specifically aimed at first-time buyers. This rate remains unchanged from the previous week and comes with a product fee of £999, provided the applicant can offer a 40% deposit.
For those looking for a shorter mortgage term, Santander is also offering a two-year fixed deal at 4.01%. This rate also remains steady compared to last week’s offering and carries the same £999 fee.
Both deals are based on a 60% loan-to-value (LTV) arrangement, meaning applicants must contribute at least 40% of the property’s value upfront. This deposit size allows borrowers access to lower rates, as lenders typically see these customers as presenting a lower financial risk.
While there have been no changes in the rates this week, Santander’s consistent offerings could still appeal to buyers looking for stability and predictability in their mortgage planning.
Barclays mortgage deals
Barclays is currently offering a five-year fixed mortgage at 3.99%, which remains the same as last week’s rate. However, customers with “Premier” status can access a slightly better rate of 3.98%.
For borrowers considering a shorter mortgage term, the lowest available two-year fixed rate stands at 3.97%. This, too, is unchanged from the previous week’s offerings.
In addition to its standard mortgage products, Barclays has introduced a new initiative aimed at helping more people access larger loans when purchasing a home. Known as Mortgage Boost, the scheme is designed to assist both new and existing customers in increasing their borrowing capacity.
The unique feature of Mortgage Boost is that it allows family members or close friends to be added to the application to improve the overall affordability assessment. Importantly, this support doesn’t involve gifting money, offering a larger deposit, or formally lending funds.
By including an additional applicant on the mortgage, borrowers may see a significant increase in the amount they can borrow. For example, someone earning £37,500 annually with a deposit of £30,000 might normally be eligible for a mortgage of up to £168,375 — allowing them to purchase a property worth around £198,375.
With Mortgage Boost, however, adding a second person with the same income could raise the combined borrowing limit to £270,000. This would enable the homebuyer to consider properties priced up to £300,000 — a substantial improvement in affordability.
This scheme could offer a helpful route onto the property ladder for those struggling to meet affordability criteria on their own, especially in today’s challenging housing market.
Nationwide mortgage deals
Nationwide is currently offering a five-year fixed mortgage at a rate of 4.24%. This deal comes with a product fee of £999 and requires a 40% deposit. There has been no change to this rate since last week.
In addition, the lender is providing a two-year fixed rate mortgage for home purchases, set at 4.04%. Like the five-year deal, it carries a £999 fee and is also available to borrowers who can offer a 40% deposit. This rate, too, remains unchanged compared to the previous week.
Alongside its mortgage rates, Nationwide has announced a revision to its eligibility criteria for its Helping Hand mortgage scheme. This scheme is specifically designed to support buyers by allowing them to borrow up to six times their income — a significant increase compared to the standard lending cap.
The minimum income required to qualify for the Helping Hand mortgage has now been reduced to £35,000 for individual applicants. This change could open the door to a wider range of potential buyers who previously did not meet the threshold.
For joint applications, the minimum income requirement remains at £55,000. However, the flexibility offered by this scheme can make a meaningful difference in borrowing capacity.
Under the Helping Hand scheme, eligible borrowers can access 33% more in funds compared to Nationwide’s usual limit of 4.5 times income. This means those struggling to afford a home under traditional borrowing limits might now have a better chance at securing a mortgage.
These updates reflect Nationwide’s efforts to provide more accessible home-buying options in today’s housing market, particularly for those with steady incomes who may have previously fallen short under standard affordability checks.
Halifax mortgage deals
Halifax, currently recognised as the UK’s largest mortgage lender, is offering a five-year fixed mortgage rate set at 4%. This deal requires a 40% deposit, making it a 60% loan-to-value (LTV) arrangement. Notably, the rate has remained unchanged compared to the previous week.
In addition to its five-year offer, Halifax – which operates under the Lloyds Banking Group – is also providing a two-year fixed mortgage rate at 4.03%. This deal includes a product fee of £999 and is aimed specifically at first-time buyers.
For those looking at longer-term security, Halifax is maintaining its 10-year fixed mortgage at a rate of 4.78%. Like the other offers, this rate is consistent with what was available the previous week, indicating stability in the lender’s offerings despite ongoing market fluctuations.
To address shifting borrower preferences, Halifax has also introduced a new mortgage product: a 1.5-year fixed-rate remortgage deal. This unusual term length reflects growing demand for shorter-term fixes in today’s unpredictable interest rate environment.
Shorter-term fixed deals are gaining popularity among homeowners who want a balance between stability and flexibility. These products provide certainty in monthly payments for a limited time, which can be appealing to those anticipating potential rate drops in the near future.
By locking in a fixed rate now, borrowers can better plan their finances while retaining the option to remortgage sooner than they would with a traditional two- or five-year deal. This strategy may be particularly useful for those watching economic changes and hoping to benefit from future reductions in borrowing costs.
Cheapest mortgage deal on the market
As mortgage lenders begin to increase their rates, many would-be homeowners are finding it more difficult to secure affordable deals. At present, NatWest is offering some of the most competitive options, with a five-year fixed-rate mortgage at 3.95% and a two-year fixed deal at 3.92%. However, to access these rates, applicants must provide a substantial 40% deposit.
To put that into perspective, with the average house price in the UK now standing at approximately £296,648, a 40% deposit would amount to nearly £120,000. This high deposit requirement can be a significant barrier for many people hoping to step onto the property ladder.
Increasingly, more UK homeowners are turning to longer mortgage terms in an effort to manage their monthly repayments. Terms of 35 years or more are becoming more common, especially among older borrowers who are now stretching their mortgage commitments into their 70s.
A growing number of lenders are responding to these shifts by offering higher income multiples and extended borrowing options. For example, April Mortgages, a relatively new lender backed by the Dutch asset management firm DMFCO, is offering mortgages fixed for five to fifteen years. These allow buyers to borrow up to seven times their income, whether they’re applying individually or as part of a joint application.
April Mortgages’ deals come with starting interest rates from 5.15% and an application fee of £195. While the rates are higher than average, the generous income multiple can be a lifeline for buyers struggling to afford a home in today’s market.
Other lenders are also adapting to the evolving housing landscape. Skipton Building Society, for instance, has announced it will allow first-time buyers to borrow up to 5.5 times their income. This initiative is aimed at helping more people make that crucial first step onto the housing ladder.
Leeds Building Society has followed suit, launching a new mortgage range that also allows first-time buyers to borrow up to 5.5 times their earnings. To qualify, applicants need to have a minimum household income of £40,000.
While these offers present new opportunities, they also come with risks. Mortgage holders across the UK have seen a steep rise in repayments in recent years, as the Bank of England’s base rate hikes have been passed on by banks and building societies.
The financial pressure is unlikely to ease in the short term. According to UK Finance, around 1.3 million fixed-rate mortgage deals are due to expire in 2025. This means many households will soon be searching for new deals at potentially higher rates.
Many borrowers are hoping the Bank of England will take more decisive action to cut interest rates in the near future. A reduction could ease the burden on mortgage holders, but it would also affect savers, many of whom would prefer rates to remain high to maintain returns.
As the housing market continues to shift, prospective buyers and current mortgage holders will need to carefully consider their options. Balancing affordability, loan terms, and long-term financial stability is becoming more crucial than ever.
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