What’s happening with mortgage rates now?

There has been lots of news about Base Rate rises and how they can impact mortgage rates. The Bank of England (BoE) meet about every six weeks to decide whether the Base Rate should go up or down, or stay the same. On 22 June, the Base Rate increased to 5%, from 4.5% in May.

Our mortgage expert, Matt Smith, says: “Compared to the previous fortnight, mortgage rate rises have gathered pace this week and are up by an average of 0.18%, compared to last week’s 0.13%.

“Despite the rate rises we’ve seen this week, swap rates – the underlying costs of mortgages for lenders – have responded positively to the news that last week’s US inflation figures fell to a two-year low, and this has taken some pressure off lenders to increase rates further.

“Some commentators have said this may be the peak for mortgage rates, but the UK inflation data for June will be published tomorrow and will be key to what happens next with the pricing of fixed rates. The market is expecting to see inflation fall back in June, but as we’ve seen in the past couple of months, if it remains stubbornly high, and doesn’t fall in line with expectations, this could cause mortgage rates to rise further.

“The best-buy, short-term fixed-deals are still approaching 6%, which is likely to be a concern to those looking to take out a mortgage soon. Some buyers may be putting their moving plans on hold while they reassess higher costs and the impact on their budgets, and this has impacted the number of home sales agreed in June.

“But overall, demand from buyers is still 3% higher than 2019’s more normal market level. Estate agents are reporting that homes that are realistically priced are still attracting motivated buyers who don’t want to miss out on the right property that is not over-priced, and that they can still afford.”

The current average mortgage rate for a five-year fixed, 85% loan-to-value mortgage is 5.90%, up from 5.69% last week. The lowest rate for this type of mortgage is 5.48%. 

What are the current UK mortgage interest rates?

On Tuesday 18 July 2023

Average fixed-term mortgage rates for home-buyers with 5-10% deposits

Loan to value (LTV)	Term	Average rate 11 Jul 2023	Average rate 18 Jul 2023	Weekly Change
95%	2-year fixed	6.75%	6.91%	+0.16%
95%	5-year fixed	6.10%	6.23%	+0.13%
90%	2-year fixed	6.33%	6.47%	+0.14%
90%	5-year fixed	5.81%	5.95%	+0.14%

Average fixed-term mortgage rates for home-buyers with 15-25% deposits

Loan to value (LTV)	Term	Average rate 11 Jul 2023	Average rate 18 Jul 2023	Weekly Change
85%	2-year fixed	6.21%	6.40%	+0.19%
85%	5-year fixed	5.69%	5.90%	+0.21%
75%	2-year fixed	6.09%	6.29%	+0.20%
75%	5-year fixed	5.56%	5.79%	+0.23%

Average fixed-term mortgage rates for home-buyers with 40% deposits

Loan to value (LTV)	Term	Average rate 11 Jul 2023	Average rate 18 Jul 2023	Weekly Change
60%	2-year fixed	6.09%	6.26%	+0.17%
60%	5-year fixed	5.59%	5.79%	+0.20%

These rates are provided by Podium and are an average based on 95% of the mortgage market. All rates are based on products with a circa £999 fee.

Average monthly mortgage repayments by average house price

You might be wondering what this week’s average mortgage rates could mean for average monthly mortgage repayments, and how this compares to the average rates offered last week.  

The average monthly mortgage payment on a first-time buyer type property* for someone taking out a five-year fixed, 85% LTV mortgage is now £1,224**, up by £20 per month compared to last week. 

*First-time buyer homes includes all 2-bed properties and smaller that come to market (houses and flats); second-stepper homes includes 3-4 bed properties, excluding 4-bed detached houses; and top-of-the-ladder represents asking prices at the top end of the market, covering all 5-bed homes and above, as well as 4-bed detached houses.
**Based on a 5-year fixed, 85% loan-to-value, 25-year term mortgage
Source: Rightmove House Price Index and Podium data

How much can you borrow with a mortgage?

The amount you can borrow with a mortgage is determined by an affordability assessment and your interest rate is determined by the amount of deposit you have, otherwise known as loan-to-value (LTV).

LTV is expressed as a percentage, and it reflects the size of the mortgage you need as a proportion of the value of the home you want to buy. The bigger the deposit you have, the lower the LTV, and vice-versa.

A good way to find out how much you could borrow is to use a mortgage calculator. And to get a personalised result by applying for a Mortgage in Principle which will take you one step closer to a mortgage offer.

Read more about the different types of mortgages and how to choose a mortgage term that meets your needs, both now and in the future.

This arcticle is courtesy of Rightmove - https://www.rightmove.co.uk/news/articles/property-news/current-uk-mortgage-rates/ The header image for this article is provided courtesy of Boardwalk Property Co, Bristol.