Mortgage lenders across the UK have adjusted their rates following the Bank of England’s decision to keep interest rates unchanged at 4%. While many providers have left their offers steady, some have taken different approaches — Santander has lifted certain rates, while Nationwide has opted to make reductions.
Data from Uswitch shows the average two-year fixed mortgage rate now sits at 4.75%, with the typical five-year deal at 4.95%. This shift reflects the mixed reactions of lenders to the Bank’s move and the wider economic outlook.
In the past week, Santander raised the price of its most competitive five-year mortgage, while Nationwide reduced its leading two-year fixed rate. Other high street banks, however, chose not to alter their existing offers.
The Bank of England’s decision to hold rates at 4% has disappointed many borrowers, especially those hoping for cuts before the end of the year. With inflation remaining above target, households and prospective buyers now face tighter affordability pressures.
The Consumer Price Index (CPI), which measures inflation, came in at 3.8% for the 12 months to August. This figure was unchanged from July, but still nearly double the Bank’s 2% target. Persistent inflationary pressures make it difficult for policymakers to justify rate cuts in the short term.
Fergus Allen of Clifton Private Finance noted that those waiting for cheaper borrowing may face challenges. He explained that first-time buyers, as well as people remortgaging, could encounter higher monthly payments and fewer available deals.
Expats returning to the UK may also struggle, with lenders often cautious about approving applications without recent credit history. High rates combined with strict lending criteria could make securing a mortgage even harder for this group.
Personal finance expert Alice Haine added that those coming to the end of a fixed deal would be wise to secure a new product quickly rather than gamble on falling rates. She pointed out that mortgage costs have been unpredictable in recent weeks, and this uncertainty is likely to continue in the run-up to the Chancellor’s Budget.
For many borrowers, the impact of rising rates is already being felt. On a £177,000 interest-only mortgage, monthly payments could rise to £1,208 — a staggering £788 more than before. This sudden increase could place households under significant financial stress.
Lloyds has warned homeowners nearing the end of their fixed deals to act quickly. Andrew Asaam, the bank’s mortgage director, highlighted that switching lenders or securing a new rate promptly could help ease the strain. Competitive remortgage deals, he said, could make a meaningful difference in controlling monthly repayments.
Looking at individual lenders, HSBC has left most of its rates unchanged, offering a five-year fixed at 4.04% (or 4.01% for Premier account holders) and a two-year fixed at 3.89% with a £999 fee. These deals assume a 60% loan-to-value (LTV), meaning a deposit of at least 40% is required.
NatWest is also holding steady, with its five-year fix at 3.94% and its cheapest two-year fix at 3.88%, both requiring a 40% deposit. Santander, however, has increased several of its products for first-time buyers, including two-, three-, five-, and ten-year deals across varying LTVs.
Barclays has chosen to maintain its offers, with a five-year fix at 4.11% and a two-year fix at 3.92%, both with an £899 fee. The bank has also launched “Mortgage Boost”, a scheme allowing family members or friends to help applicants increase their borrowing capacity without providing cash directly.
Nationwide has slightly reduced its two-year fix for first-time buyers to 3.99%, down from 4.03%, while its five-year deal remains at 4.22%. The lender has also relaxed some of its affordability checks, allowing more applicants to borrow larger amounts. Its “Helping Hand” scheme continues to support first-time buyers by permitting borrowing up to six times income.
Halifax remains competitive, keeping its five-year fix at 3.99% and its two-year fix at 3.83%, both at 60% LTV. The lender has also expanded borrowing limits on its five-year products, allowing buyers to access up to £38,000 more.
Among the big lenders, NatWest currently offers the cheapest five-year fix at 3.94%, while Halifax leads on two-year fixes with a 3.85% deal. However, both require a substantial 40% deposit, which equates to over £108,000 on the average UK house price of £271,079.
With affordability becoming an increasing concern, many borrowers are turning to longer mortgage terms of 35 years or more. This trend is particularly noticeable among older buyers, who may now be extending repayment plans well into their 70s.
Mortgage lenders across the UK have adjusted their rates following the Bank of England’s decision to keep interest rates unchanged at 4%. While many providers have left their offers steady, some have taken different approaches — Santander has lifted certain rates, while Nationwide has opted to make reductions.
Data from Uswitch shows the average two-year fixed mortgage rate now sits at 4.75%, with the typical five-year deal at 4.95%. This shift reflects the mixed reactions of lenders to the Bank’s move and the wider economic outlook.
In the past week, Santander raised the price of its most competitive five-year mortgage, while Nationwide reduced its leading two-year fixed rate. Other high street banks, however, chose not to alter their existing offers.
The Bank of England’s decision to hold rates at 4% has disappointed many borrowers, especially those hoping for cuts before the end of the year. With inflation remaining above target, households and prospective buyers now face tighter affordability pressures.
The Consumer Price Index (CPI), which measures inflation, came in at 3.8% for the 12 months to August. This figure was unchanged from July, but still nearly double the Bank’s 2% target. Persistent inflationary pressures make it difficult for policymakers to justify rate cuts in the short term.
Fergus Allen of Clifton Private Finance noted that those waiting for cheaper borrowing may face challenges. He explained that first-time buyers, as well as people remortgaging, could encounter higher monthly payments and fewer available deals.
Expats returning to the UK may also struggle, with lenders often cautious about approving applications without recent credit history. High rates combined with strict lending criteria could make securing a mortgage even harder for this group.
Personal finance expert Alice Haine added that those coming to the end of a fixed deal would be wise to secure a new product quickly rather than gamble on falling rates. She pointed out that mortgage costs have been unpredictable in recent weeks, and this uncertainty is likely to continue in the run-up to the Chancellor’s Budget.
For many borrowers, the impact of rising rates is already being felt. On a £177,000 interest-only mortgage, monthly payments could rise to £1,208 — a staggering £788 more than before. This sudden increase could place households under significant financial stress.
Lloyds has warned homeowners nearing the end of their fixed deals to act quickly. Andrew Asaam, the bank’s mortgage director, highlighted that switching lenders or securing a new rate promptly could help ease the strain. Competitive remortgage deals, he said, could make a meaningful difference in controlling monthly repayments.
Looking at individual lenders, HSBC has left most of its rates unchanged, offering a five-year fixed at 4.04% (or 4.01% for Premier account holders) and a two-year fixed at 3.89% with a £999 fee. These deals assume a 60% loan-to-value (LTV), meaning a deposit of at least 40% is required.
NatWest is also holding steady, with its five-year fix at 3.94% and its cheapest two-year fix at 3.88%, both requiring a 40% deposit. Santander, however, has increased several of its products for first-time buyers, including two-, three-, five-, and ten-year deals across varying LTVs.
Barclays has chosen to maintain its offers, with a five-year fix at 4.11% and a two-year fix at 3.92%, both with an £899 fee. The bank has also launched “Mortgage Boost”, a scheme allowing family members or friends to help applicants increase their borrowing capacity without providing cash directly.
Nationwide has slightly reduced its two-year fix for first-time buyers to 3.99%, down from 4.03%, while its five-year deal remains at 4.22%. The lender has also relaxed some of its affordability checks, allowing more applicants to borrow larger amounts. Its “Helping Hand” scheme continues to support first-time buyers by permitting borrowing up to six times income.
Halifax remains competitive, keeping its five-year fix at 3.99% and its two-year fix at 3.83%, both at 60% LTV. The lender has also expanded borrowing limits on its five-year products, allowing buyers to access up to £38,000 more.
Among the big lenders, NatWest currently offers the cheapest five-year fix at 3.94%, while Halifax leads on two-year fixes with a 3.85% deal. However, both require a substantial 40% deposit, which equates to over £108,000 on the average UK house price of £271,079.
With affordability becoming an increasing concern, many borrowers are turning to longer mortgage terms of 35 years or more. This trend is particularly noticeable among older buyers, who may now be extending repayment plans well into their 70s.
Download NOW
4 Simple Steps To Becoming Wealthy Through Property