Mortgage rates are falling, as the market continues to recover from the shockwaves caused by the government's mini-budget in September - but figures remain high compared to last year. Show
More than 1,500 mortgages were withdrawn in the autumn, resulting in average rates on two-year fixes rising to a 14-year high. However, as some of the cheapest deals have now started to dip below 5%, there are signs that the market is calming somewhat. Here, we explain why banks pulled their deals and outline the cheapest mortgages currently available. This newsletter delivers free money-related content, along with other information about Which? Group products and services. Unsubscribe whenever you want. Your data will be processed in accordance with our Privacy policy Why did mortgage rates rise so steeply?In September, some of the UK's biggest mortgage lenders withdrew their deals for home buyers and people remortgaging The dramatic drop in the value of the pound following the mini-budget led to expectations that the cost of borrowing would increase more steeply than expected. Faced with this prospect, a series of lenders pulled their deals overnight, leaving rates much higher than before. The good news for borrowers is that deal numbers are now rising again and rates are slowly falling. Rates below 5% have now begun to return.
What's happening to mortgage rates?Mortgage rates have been rising throughout 2022. The Bank of England recently increased the base rate to 3.5%. This was the ninth rise since last December, when the rate was at a historic low of 0.1%. These hikes are part of the Bank’s attempts to keep rising inflation at bay. CPI inflation hit 10.7% in November, more than five times the target of 2%. The cheapest mortgage rates are now around five times the record lows of 0.79% recorded a year ago, when there were more than 100 fixed-rate mortgages with rates below 1%. Data from Moneyfacts shows that despite the recent drop, mortgage rates remain significantly higher than on 23 September, the day of the mini-budget. Two-year fixed rate6.08%4.74%Five-year fixed rate5.89%4.75% Note: The below figures are correct at time of writing, but there's no guarantee the specific deals we've listed will remain on the market. If you're looking to apply for a mortgage imminently, a whole-of-market mortgage broker will be able to give you up-to-date advice on your options. Best rates for borrowers with bigger depositsThe best mortgage rates are usually available for people borrowing at 60% loan-to-value, although even these market-leading deals are now priced around 5%. Two-year fixCoventry Building Society
Five-year fixHalifax4.5%
Best rates on 90% mortgagesIf you're looking to buy your first home, you can get a mortgage with a deposit of 5% of the property's value (known as a 95% mortgage). If you can stretch to a 10% deposit, however, you can benefit from a much lower rate. Two-year fixHalifax5.4%
Five-year fixHalifax4.85%
Best rates on 95% mortgagesBorrowers with the smallest deposits generally pay the highest mortgage rates. With fewer deals available than before, many 95% mortgages are now priced at above 6%. Two-year fixHalifax5.6%
Five-year fixHalifax5%
Does a lower rate always mean a cheaper deal?Above, we've listed the deals with the cheapest initial rates. This gives a good indication of the rate you might be able to get, depending on the size of your deposit, but before choosing a deal you'll also need to factor in upfront fees. Some lenders charge fees as high as £1,999 on their lowest-rate deals. By charging higher fees, lenders can offer better rates and recoup the shortfall elsewhere. Banks commonly charge fees such as £999, £1,499 or £1,999, but some use percentages instead - for example 0.5% of the overall loan amount. If you're borrowing a larger sum, this can be significantly more expensive. You'll usually need to pay a premium of 0.2%-0.5% to get a fee-free deal. Sometimes, this can pay off. For example, if you can get a mortgage at 5.5% with a £999 fee, or 5.6% with no fee, the latter will be cheaper over the fixed term. If you're unsure about which type of deal to go for, a mortgage adviser will be able to analyse deals based on their true cost, taking into account rates, fees and incentives. Are you worried about your finances?  How long should you fix your mortgage for?Borrowers most commonly fix for either two or five years. Five-year deals were once significantly more expensive, but in most instances it's now actually cheaper to fix for longer. Securing your rate for longer is a good idea in theory, but it's not the right move for everyone. Five-year fixes usually come with higher early repayment charges, meaning that you could be charged thousands of pounds if you decide to repay the mortgage early (for example, if you move home and don't transfer it to the new property). With this in mind, it's important to think of your own medium and long-term plans before settling on a fixed term. key information You can find out more in our full story on remortgaging. If you're worried about making your mortgage payments, see our guide on what to do if you can't pay your mortgage. Which? Money PodcastOn a recent episode of the Which? Money Podcast, we explained what high mortgage rates mean for people remortgaging or buying a home in the remainder of 2022 and beyond. What are the current mortgage rates for firstBest First-Time Buyer Rates. 2 Year Fixed. 4.82% 6.6% 90%. 5 Year Fixed. 4.75% 6.1% 90%. Discounted Variable. 3.29% 5.3% 95%. All First-Time Buyer. 3.29% 5.3% 95%. What is the average mortgage interest rate UK 2022?As at November 2022 average mortgage rates for a 2-year fixed rate 90% LTV mortgage have risen to 6.25% from a low of 1.95% in January. This is the highest level they have been since September 2010 when they were 6.27%.
What is a good APR on a 30Right now, good mortgage rates for a 15-year fixed loan generally start in the 5% range, while good rates for a 30-year mortgage generally start in the 6% range. At the time this was written in Nov. 2022, the average 30-year fixed rate was 6.61% according to Freddie Mac's weekly survey.
Is 3% good for mortgage?Anything at or below 3% is an excellent mortgage rate. And the lower, your mortgage rate, the more money you can save over the life of the loan.
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Average mortgage rate for first time buyers
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