Latest on Mortgage Rates

In the ever-changing landscape of the UK's mortgage rates, a multitude of variables come into play. The loan-to-value (LTV) percentage, for example, can cause these rates to vary significantly.

Recently, the Bank of England increased the Base Rate to 5.25%, a move that has substantial influence on mortgage rates. However, the financial markets have given us a glimmer of hope, suggesting that we might see rate reductions in the future. In fact, some experts predict sub-5% rates returning to the market.

As it stands, the average mortgage rate for a five-year fixed, 85% loan-to-value mortgage rests at 5.73%. This is supported by NerdWallet's research, which reveals that the average rate for a similar two-year fixed-rate mortgage is 5.96%. For those with a 10% deposit or equity, the average five-year fixed rate hovers around the same figure.

Other sources like HSBC and Rightmove provide comparable figures for their fixed-rate mortgages. Rightmove's data shows that the current interest rates for a 95% LTV mortgage are 6.61% for a two-year fixed term and 6.03% for a five-year fixed term. Barclays offers a range of rates from 5.15% to 5.43%.

Interestingly, Forbes' partnership with Better.co.uk reported that the best two-year fixed rate has dipped below 5% at 4.69%. On the other hand, Moneysupermarket.com highlights the potential annual savings when re-mortgaging from a higher standard variable rate of 7.49% to a 5-year fixed rate of 3.94%, given a 50% LTV.

With the base rate currently at 5.25%, mortgage rates have been nudged to go above 6%. However, predictions indicate that the base rate will peak at about 5.75% in 2024. From 1995 until today, the United Kingdom's mortgage rate has averaged at 5.64%.

David Pett, Solicitor with MJP Conveyancing, a national provider of conveyancing services, offered an insightful explanation of these figures. He stated, "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."

Keeping an eye on the ever-changing mortgage rates and understanding how they are influenced is crucial for anyone looking to step onto the property ladder or remortgage their current home. With the possibility of rate reductions on the horizon, now could be a prime time to consider your options.