November 8, 2024
Best UK mortgage deals of the week, 7 November #UKFinance

Best UK mortgage deals of the week, 7 November #UKFinance

CashNews.co

Under 4%-deals hitting the market were expected to spark another mortgage war among big lenders but mortgage brokers warn that actually, more rises are on the way.

The average two-year fixed mortgage rate is now 5.4%, according to data from Moneyfacts, while a five-year deal has an average rate of 5.11%.

The Bank of England cut interest rates to 4.75% on Thursday as inflation dropped below 2% in September, coming in at 1.7%, in good news for mortgage holders.

However, homeowners are facing a challenging financial outlook as the budget statement by chancellor Rachel Reeves signalled further strain on mortgage holders.

The Office for Budget Responsibility (OBR) has projected that the average mortgage rate is set to climb from 3.7% in 2024 to 4.5% by 2027. Meanwhile, house prices are anticipated to escalate, reaching an average of £310,000 by 2028.

Read more: Bank of England cuts interest rates to 4.75%

For prospective buyers, the financial burden continues to pile on. A typical mortgage for a home valued at £290,000, with a 10% deposit and an interest rate of 3.7%, would result in monthly repayments of approximately £1,334.

In contrast, a 25-year mortgage on a property priced at £310,000, assuming the same deposit but with an interest rate of 4.5%, would see monthly payments rise to £1,550—an increase of £216.

HSBC (HSBA.L) has a 3.95% rate for a five-year deal. This is higher from the previous week and for those that have a Premier Standard account with the lender this rate comes in at 3.92%.

Looking at the two-year options, the lowest rate comes in at 4.12% with a £999 fee, which is lower than before.

Both cases assume a 60% LTV mortgage, meaning buyers need to have at least 40% for a deposit.

HSBC offers 95% LTV deals, meaning you only need to save for a 5% deposit. The rates are much higher, however, with a two-year fix coming in at 5.65% or 5.16% for a five-year fix.

Read more: Best credit card deals of the week

This is because the rate someone can get will be determined by their financial situation and the size of their deposit. The larger the deposit, the lower the LTV, allowing buyers to access better deals because lenders consider them less risky.

“The significant aspect of HSBC’s offer is the combination of a low rate and a manageable fee, making this deal highly attractive,” said Nick Mendes of John Charcol brokers.

NatWest (NWG.L) is offering 3.84% for a five-year deal with a £1,495 fee, which is unchanged from last week.

For a two-year fix, the cheapest deal comes in at 3.99%, also unchanged. In both cases, you’ll need at least a 40% deposit to qualify for the rates.

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