Current UK mortgage rates?
If you’re thinking about buying a home, you might be wondering what the current mortgage rates are in the UK. Rightmove posted an interesting overview of what’s currently happening in the UK. This is what they said:
“Lenders change the rates of their mortgage products regularly. That’s why we update the average mortgage rates weekly and compare how they’ve changed since the previous week. You can also compare the rates across a range of loan to value (LTV) percentages.
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 3 August, the Base Rate increased to 5.25%, from 5% in June.
Our mortgage expert Matt Smith says: “This is the sixth consecutive week we’ve seen average mortgage rates drop, and with some of the bigger lenders signalling their intention to announce further rate drops in the coming days, this will be a confidence booster for those looking to take out a mortgage soon.
“Over this six-week period we’ve seen average 5-year fixed mortgages fall by 0.42%, while 2-year fixed rates are down by 0.33%. More stability in the mortgage market after a topsy-turvy few months earlier in the year is a good thing for home movers, particularly as it means we are seeing lenders continuing to actively compete for business”, he adds.
The current average mortgage rate for a five-year fixed, 85% loan-to-value mortgage is 5.73%, down from 5.77% last week. The lowest rate for this type of mortgage is 5.24%.
(Click here for full article including rates: 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.)
When could mortgage rates start to drop?
Right now, the financial markets are predicting that the Base Rate may peak at around 5.75%, in early 2024. Once we’ve passed this peak, it’s thought interest rates will slowly start to come down – and we can expect mortgage rates to follow this pattern.
We’ve seen mortgage rates edge down slowly in recent weeks, in response to the positive inflation figures. But it’s difficult to predict when we could start to see more sizeable drops in mortgage rates, mostly because their movement is dependent on several factors. Including inflation continuing to decrease, falling swap rates, and no unexpected shocks to the economy.
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 current average asking price of a typical first-time buyer property* is £223,614. Based on that, the average monthly mortgage payment for a first-time buyer taking out an average five-year fixed, 85% LTV mortgage, is now £1,193 per month if repaying over 25 years, down by £5 per month compared to last week.
Source: Rightmove House Price Index and Podium data
*First-time buyer homes includes all 2-bed properties and smaller that come to market (houses and flats).
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.
Modified article taken in part from an article from: Rightmove
If you liked this article, you may enjoy this one: Will mortgage rates go down in autumn 2023?
Important Information
All property sales and the financial advice that surrounds them are as unique as the people engaging in the transaction. It is important to not decide without seeking professional advice. If you want to sell your home and are considering redecorating before marketing, speak to one of our Property Professionals to get the best advice for presenting your home for sale before making any investment. This article is for the purpose of information only and should not be seen as financial advice.