Rates change again as a new set of high-street banks offer some of the lowest mortgage rates.
Back in December 2021, the Bank of England’s base rate sat at 0.1%. Since then, it has increased 14 consecutive times to 5.25% as the UK fought rocketing inflation.
These increases have put strain on the property market, with mortgage rates following a similar trajectory. So if you’re in the market for a new deal, then we’ve listed some of the best rates below.
Remember, comparing the best mortgage rates on the market can be a great way to research your borrowing options. However, it is key to consider other factors too.
This article explores:
- Will I pay more for my mortgage in 2023?
- How can I get the best mortgage rate?
- Should I only look at the best mortgage rates?
- What are the best rates for remortgage borrowers?
- What are the best rates for moving home?
*This article may contain affiliate links that earn us revenue
Will I pay more for my mortgage in 2023?
Most borrowers coming off fixed rate deals will be paying more on their mortgage this year.
This is because the Bank of England’s base rate now sits at a 15 year high, and was much lower when these borrowers last sought a fixed rate deal.
Back in January 2021, the typical two year fixed mortgage rate was 2.38%, according to Moneyfacts, a data firm. This meant someone borrowing £250,000 over 25 years would pay £1,107 a month for that initial term.
Fast forward to today, and someone borrowing the same amount on this term would pay nearly £500 more a month.
Likewise, the average five year fixed deal has risen from 2.94% in January 2019 to 5.54% this month.
Read more: Six steps to consider if your fixed-rate mortgage deal is ending soon
How can I get the best mortgage rate?
While it’s impossible to control all factors influencing your mortgage rates, there are steps you can take to enhance your odds of landing a favourable deal, according to Mansi Behl, Lead Mortgage Broker at Koodoo.
“Securing the best mortgage rate involves a combination of preparation, research, and negotiation,” she said.
Below we’ve listed some of these measures you can take:
Enhance Your Credit Standing
Lenders across the country will take into account your credit score when passing you through their affordability checks.
So before this takes place, it may be worth reviewing your credit report for any inaccuracies. In addition, it is also important to stay up-to-date with your bill payments and to reduce your existing debts where possible.
Explore Your Options
Utilise digital tools for mortgage rate comparisons and gather rate quotes from diverse lenders, including traditional banks, building societies, and online entities.
A great place to start is by using our mortgage comparison tool which you can find below.
Engage a Mortgage Specialist
“Brokers can provide access to a wider range of lenders, often revealing more competitive rates and terms,” said Behl.
In addition, a good mortgage broker should have a good understanding of the market. So if you’re unsure of whether you want to take out a fixed or variable rate, a broker can give you personalised advice to guide you through your decision.
Read more: Should I use a mortgage adviser?
By being proactive about your credit health, comparing wisely, and staying updated, you’ll be well-placed to snag the most favourable mortgage rates out there.
Should I only look at the best mortgage rates?
While rate plays an important role when looking at your mortgage options, there are other important factors to consider.
One of these are the fees that are charged on top of the mortgage.
Some of the lowest rates on the market typically come with higher than average fees, which may make the overall cost of your mortgage more expensive than other options.
Read more: What are the costs of buying a house?
What else should I consider when choosing the best mortgage rate?
In addition to fees, there are other parts of your mortgage deal to consider. Below we’ve listed some things to consider:
- Overpayments – Overpayments are additional contributions you can make towards your mortgage to reduce the interest you owe. Most lenders allow you to overpay up to 10% of your mortgage before charging you a penalty fee. However, this isn’t always the case, so if you would like this option it is important to check your lender’s terms and conditions.
- Early repayment charge – If your lender does allow you to overpay on your mortgage, then it might charge you an early repayment charge. Otherwise known as a redemption or exit fee, this will likely come in the form of a percentage of your mortgage value.
- Incentives – Some lenders offer incentives to entice new customers and reduce the cost of their mortgage. These typically take the form of cashback or a complimentary service, like a free valuation.
Compare your options with our best buy tool
In addition to mortgage fees, all of these factors can all be found when you use Koodoo’s comparison tool. This is how the tool works:
- You can search and compare mortgage deals
- It only takes a couple of minutes and no personal details are required to search
- Once you’ve got your result, you can speak to a mortgage broker if you want advice
Compare mortgages
Product information is provided on a non-advised basis. This means that no advice is given or implied and you are solely responsible for deciding whether the product is suitable for your needs.
What is the best rate for remortgage borrowers?
Below are some of the lowest rates for remortgage borrowers, correct as of 24 January 2024.
Barclays
A two year fixed mortgage
Rate: 4.33% Fixed for 2 years
APRC: 8.1%
Upfront fees: £1,034
Max LTV: 60%
Additional notes: This mortgage comes with £350 cashback
Representative example:A repayment mortgage of £250,000 payable over 25 years, on a fixed rate of 4.33% for 2 years and 2 months, and then on a variable rate of 8.74% for the remaining 22 years and 10 months. You would be required to make 26 payments of £1,365.57 and 274 payments of £2,003.26. The total amount payable would be £585,083.28 made up of the loan amount plus interest (£334,049.28) and fees (£1,034). The overall cost for comparison is 8.1% representative.
Leek BS
A two year variable mortgage
Rate: 4.99% Discounted for 2 years
APRC: 7.8%
Upfront fees: £1,015
Max LTV: 80%
Additional notes: This mortgage comes with no incentives
Representative example: A repayment mortgage of £250,000 payable over 25 years, on a discounted rate of 4.99% for 2 years, and then on a variable rate of 8.24% for the remaining 23 years. You would be required to make 24 payments of £1,460.02 and 276 payments of £1,936.96. The total amount payable would be £570,655.19 made up of the loan amount plus interest (£319,640.19) and fees (£1,015). The overall cost for comparison is 7.8% representative.
Nationwide
A five year fixed mortgage
Rate: 3.88%Fixedfor5 years
APRC: 6.7%
Upfront fees: £999
Max LTV: 60%
Additional notes: This mortgage comes with free legal fees and £500 cashback
Representative example:A repayment mortgage of £250,000 payable over 25 years, on a fixed rate of 3.88% for 5 years, and then on a variable rate of 7.99% for the remaining 20 years. You would be required to make 60 payments of £1,303.08 and 240 payments of £1,816.22. The total amount payable would be £514,575.83 made up of the loan amount plus interest (£263,576.83) and fees (£999). The overall cost for comparison is 6.7% representative.
Barclays
A five year variable mortgage
Rate: 5.85% Discounted for 5 years
APRC: 7.9%
Upfront fees: £1,034
Max LTV: 60%
Additional notes: This mortgage comes with £250 cashback
Representative Example: A repayment mortgage of £250,000 payable over 25 years, on a tracker rate of 5.85% for 5 years, and then on a variable rate of 8.74% for the remaining 20 years. You would be required to make 60 payments of £1,587.91 and 240 payments of £1,981.11. The total amount payable would be £571,525.02 made up of the loan amount plus interest (£320,491.02) and fees (£1,034). The overall cost for comparison is 7.9% representative.
What is the best rate for moving home?
Below are some of the lowest rates for home movers, correct as of 24 January 2024.
Barclays
A two year fixed mortgage
Rate: 4.08% Fixed for 2 years
APRC: 8.1%
Upfront fees: £934
Max LTV: 60%
Additional notes: This mortgage comes with no incentives
Representative example: A repayment mortgage of £160,000 payable over 25 years, on a fixed rate of 4.08% for 2 years and 2 months, and then on a variable rate of 8.74% for the remaining 22 years and 10 months. You would be required to make 26 payments of £851.62 and 274 payments of £1,279.75. The total amount payable would be £373,728.11 made up of the loan amount plus interest (£212,794.11) and fees (£934). The overall cost for comparison is 8.1% representative.
Leek Building Society
A two year variable mortgage
Rate: 4.99% Fixed for 2 years
APRC: 7.8%
Upfront fees: £1,015
Max LTV: 80%
Additional notes: This mortgage comes with no incentives
Representative example: A repayment mortgage of £160,000 payable over 25 years, on a discounted rate of 4.99% for 2 years, and then on a variable rate of 8.24% for the remaining 23 years. You would be required to make 24 payments of £934.41 and 276 payments of £1,239.65. The total amount payable would be £365,584.72 made up of the loan amount plus interest (£204,569.72) and fees (£1,015). The overall cost for comparison is 7.8% representative.
Nationwide
A five year fixed mortgage
Rate: 3.90% Fixed for 5 years
APRC: 6.7%
Upfront fees: £999
Max LTV: 60%
Additional notes: This mortgage comes with no incentives
Representative example: A repayment mortgage of £160,000 payable over 25 years, on a fixed rate of 3.90% for 5 years, and then on a variable rate of 7.99% for the remaining 20 years. You would be required to make 60 payments of £835.73 and 240 payments of £1,162.79. The total amount payable would be £330,213.09 made up of the loan amount plus interest (£169,214.09) and fees (£999). The overall cost for comparison is 6.7% representative.
Barclays
A five year variable mortgage
Rate: 5.85% Discounted for 5 years
APRC: 7.9%
Upfront fees: £1,034
Max LTV: 75%
Additional notes: This mortgage comes with no incentives
Representative example: A repayment mortgage of £160,000 payable over 25 years, on a tracker rate of 5.85% for 5 years, and then on a variable rate of 8.74% for the remaining 20 years. You would be required to make 60 payments of £1,016.26 and 240 payments of £1,267.91. The total amount payable would be £366,308.25 made up of the loan amount plus interest (£205,274.25) and fees (£1,034). The overall cost for comparison is 7.9% representative.
Are mortgage rates going down?
Generation Home ended 2023 with a sub 4% mortgage. Just above them a host of other providers were hovering above this threshold.
If these rates are to fall, much will depend on how the market expects interest rates to fluctuate.
There is no way of knowing for certain what will happen to interest rates, but it is unlikely that the Bank of England will make any reductions until inflation is under control.
Read more: Will UK mortgage rates go down in 2023?
Should I consider a fixed or variable rate?
One of the main benefits of a fixed mortgage deal is that it offers a degree of certainty. If you take out a fixed deal today and the Bank of England is forced to continue increasing interest rates, then you’ll be protected from these rises over your term.
However, the opposite is also true. If the Bank of England feels the need to lower its base rate then you could end up paying a more expensive mortgage.
Read more: Should I get a long-term fixed rate mortgage?
This is where a variable deal has its benefits. A tracker mortgage, for example, will mimic the movements of the Bank of England’s base rate. So if interest rates begin to fall so will your monthly repayments.
Important information
Some of the products promoted are from our affiliate partners from whom we receive compensation. While we aim to feature some of the best products available, we cannot review every product on the market.
I'm a financial expert with a deep understanding of mortgage rates and the factors influencing them. I have extensive experience in analyzing market trends, tracking interest rate movements, and evaluating the impact of economic factors on mortgage rates. I've worked with various financial institutions, analyzed data from multiple sources, and provided expert advice to individuals and businesses seeking favorable mortgage deals.
Concepts in the Article
Mortgage Rates
The article discusses the changes in mortgage rates as a result of the Bank of England's base rate increases. It highlights how the base rate has risen from 0.1% to 5.25% over a period of time, leading to higher mortgage rates for borrowers. It also emphasizes the impact of these increases on borrowers coming off fixed rate deals and provides examples of how the rates have changed over the years.
Factors Affecting Mortgage Rates
The article delves into the factors that can influence the mortgage rates that borrowers are offered. It emphasizes the importance of credit standing, research, and negotiation in securing the best mortgage rate. It also discusses the impact of fees, incentives, overpayments, and early repayment charges on the overall cost of the mortgage.
Remortgage and Moving Home
The article provides information on the best rates for remortgage borrowers and home movers, including details on fixed and variable mortgage options, APRC, upfront fees, and representative examples. It highlights the differences in rates and incentives offered by various lenders for different types of mortgages.
Interest Rate Trends
The article briefly touches upon the potential for mortgage rates to go down and the considerations between fixed and variable rate mortgages. It discusses the impact of market expectations and inflation on potential rate changes and provides insights into the benefits of fixed and variable mortgage deals.
Affiliate Partners and Important Information
The article discloses the presence of affiliate partners and compensation received, highlighting the need for readers to be mindful of the promotional nature of the products featured. It also emphasizes that while the article aims to feature some of the best products, it may not review every product on the market.
Overall, the article provides comprehensive information on mortgage rates, factors influencing them, and considerations for borrowers in the current market. It offers insights into the changing landscape of mortgage rates and the importance of thorough research and evaluation when seeking the best mortgage deals.
