The housing market has been thrown into chaos in recent weeks as buyers and sellers delay their moves in the wake of the coronavirus.
This, on top of the recent Bank of England Base Rate cuts, has led to some mortgage lenders pulling products in a move not seen since the credit crunch.
Barclays and Halifax’s intermediary brands have stopped selling mortgages above 60 per cent loan-to-value, while other lenders stopped lending on deals which track the Base Rate directly.
Meanwhile, experts say that the cost to lenders from offering mortgage holidays to customers may dampen any benefit from the Base Rate cut to fixed-rates.
And while it’s too soon to tell, experts have warned that a decrease in competition among lenders as they pull deals from the market might lead to a price hike in future.
This long-running guide can help you find the best deals still on offer.
> Quick link: Use our calculator to find mortgage rates for you
With all the different type of deal choosing the right mortgage can seem like a minefield
You can check best buy tables and the best mortgage rates for your circumstances with our mortgage finder powered by London & Country – and figure out what you’ll actually be paying by using our new and improved mortgage calculator.
What are the best mortgage deals?
The attraction of a two-year fix may be lower rates now and extra flexibility, but that comes at the expense of needing to remortgage in two years to avoid slipping onto a more expensive standard variable rate.
A five-year fix gives the opportunity to lock into a low rate for a longer period and avoid extra fees and higher rates in a relatively short time.
Unless you have a good reason to take a two-year fixed rate, such as needing to move or expecting to have to sell your home, brokers have suggested that five-year fixed rates might be a cheaper long-term bet.
Even if the base rates stays low, if lenders are worried about the effect of Brexit, they are likely to make it harder for borrowers to get a mortgage by making their affordability and income tests harder to pass.
Whatever the right type of mortgage for your circumstances, shopping around and speaking to a good mortgage broker is a wise move.
Borrowers should have a quick look at the rates below. These are regularly updated by This is Money’s mortgage team. If you spot a deal you think has been pulled or should be in there, email us via [email protected] with mortgage rates in the subject field.
For a full rate check use This is Money’s mortgage finder service and best buy tables, these are supplied by our independent broker partner London & Country.
Best fixed-rate mortgage deals
Bigger deposit mortgages
Five-year fixed rate mortgages
Skipton has a five-year fixed-rate mortgage at 1.41 per cent with a £1,995 fee at 60 per cent loan-to-value
Santander has a five-year fixed-rate mortgage at 1.44 per cent with a £999 fee at 60 per cent loan-to-value
Two-year fixed rate mortgages
Natwest has a two-year fixed-rate mortgage at 1.19 per cent with a £995 fee at 60 per cent loan-to-value
Santander has a two-year fixed-rate mortgage at 1.19 per cent with a £999 fee at 60 per cent loan-to-value
Mid-range deposit mortgages
Five-year fixed rate mortgages
Yorkshire Building Society has a five-year fixed-rate mortgage at 1.51 per cent with a £1,909 fee at 75 per cent loan-to-value
HSBC has a five-year fixed rate mortgage at 1.54 per cent with a £999 fee at 75 per cent loan-to-value
Two-year fixed rate mortgages
Leeds Building Society has a two-year fixed-rate mortgage at 1.14 per cent with a £1,999 fee at 75 per cent loan-to-value
Natwest has a two-year fixed rate mortgage at 1.26 per cent with a £995 fee at 75 per cent loan-to-value
Smaller deposit mortgages
Five-year fixed rate mortgages
Atom Bank has a five-year fixed rate mortgage at 2.94 per cent with no fee at 95 per cent loan-to-value
Yorkshire Building Society has a five-year fixed-rate mortgage at 2.98 per cent with a £49 fee at 95 per cent loan-to-value
Two-year fixed rate mortgages
Yorkshire Building Society has a two-year fixed-rate mortgage at 2.77 per cent with a £49 fee at 95 per cent loan-to-value
Hanley Economic Building Society has a two-year fixed-rate mortgage at 2.85 per cent with a £648 fee at 95 per cent loan-to-value
Best tracker rate mortgages
Tracking a 0.10 per cent Base Rate may seem an odd decision when rates are likely to only go up – and you could fix for up to five years at a lower rate – however, there is one big advantage to a good lifetime tracker, flexibility.
A fixed-rate mortgage will almost inevitably carry early repayment charges, meaning you will be limited as to how much you can overpay, or face potentially thousands of pounds in fees if you opt to leave before the initial deal period is up.
You should be able to take a good fixed mortgage with you if you move, as most are portable, but there is no guarantee your new property will be eligible or you may even have a gap between ownership.
A good lifetime tracker has no early repayment charges, you can up sticks whenever you want and that suits some people.
Make sure you stress test yourself against a sharper rise in base rate than is forecast.
Melton BS has a lifetime discounted variable rate at 3.00 per cent for the term, currently at 1.99 per cent with fees of £1,365 at 60 per cent loan-to-value.
Hanley Economic BS has a lifetime discounted variable rate at 3.29 per cent for the term, currently at 2.00 per cent with fees of £1,567 at 80 per cent loan-to-value.
Shorter trackers
Cumberland Building Society has a two-year discount of 2.88 per cent – currently 1.21 per cent – with fees of £999 at 60 per cent loan-to-value
Leeds BS has a two-year discount of 4.30 – currently 1.39 per cent – with fees of £999 at 75 per cent loan-to-value
Watch out for discount rates, as these track a rate set by the lender rather than following the path of the Bank of England base rate.
Most lenders move their internal variable rate in line with the base rate, but they don’t have to, meaning you could see your rate rise even if the base rate stays put.
Can you get a mortgage?
Banks and building societies have broadly got to grips with the tougher new mortgage rules introduced more than four years ago in April 2014.
But getting a mortgage is tougher than it once was. You will need to get your finances in order and be prepared for the lengthier application process and in-depth affordability interviews getting a mortgage requires nowadays.
Lenders also apply different standards to what they will lend.
Weigh up the above, check the rates here and in our best buy mortgage tables, have a scout around what the best deals look like – and speak to a good independent broker.
There are a couple of things to look out for if you do decide to fix.
You need to check the bumper arrangement fees are worth paying – if you don’t have a big mortgage you may be better off with a slightly higher rate and lower fee.
It’s also wise to think carefully about whether you expect to move home soon. A good five-year fix should be portable, so you can take it with you.
But your new property will need to be assessed and you might need to borrow extra money, and so your lender could still say no. Getting out of a fixed rate typically requires a hefty hit to the pocket from early repayment charges.
Today’s low rates may stick around, they may even inch a little lower, but they may also be swiftly axed.
If you think you’d kick yourself if you miss out on one, then set aside some time to consider what to do.
Compare true mortgage costs
Work out mortgage costs and check what the real best deal taking into account rates and fees. You can either use one part to work out a single mortgage costs, or both to compare loans
Choosing a mortgage – the essential quick guide
1. How big a deposit do I need?
To get the full choice of deals raising a decent deposit is still vital. The benchmark figure is 25 per cent, if you have this then you’ll be getting close to the best rates, although for an absolute cheapest deal you’re still likely to need 40 per cent.
However, a selection of better deals for smaller deposits is also now available.
2. Should I take a fixed rate?
The consensus is that there will be no dramatic sudden interest rate increases. However, these forecasts are no guarantee that rates won’t rise and when rates do rise trackers will get more expensive.
Borrowers needing security should consider the extra cost of a fix as worthwhile. If you are taking a tracker because you couldn’t afford the equivalent fixed rate then you are putting yourself in a very dangerous position.
If you decide to take a fix you need to carefully consider how long for. Two-year deals are cheap but only offer very short-term security and incur extra costs when you remortgage. Five-year deals lock you in for longer and come with slightly higher rates but better security and no need to remortgage in a relatively short space of time.
3. Should I take a tracker rate?
Tracker rates are essentially a gamble. What looks like a bargain rate now, could soon get very expensive when interest rates rise.
Anyone considering a tracker needs to make sure they are not just storing up a problem for the future. If the tracker comes with an early redemption penalty that would make it expensive to jump ship, then make sure your finances could take a rise of at least 2 per cent to 3 per cent in interest rates.
For that reason we at This is Money like tracker deals that fit into one of these three categories: no early redemption penalties, a cap to how high the rate will go, or that let you jump ship for a fixed rate if rates rise.
4. Should I get off a standard variable rate?
Standard variable rates are what borrowers slip onto by default when they finish a fixed or tracker deal period.
They can typically be changed by lenders at any time – without the Bank of England moving rates, they may also rise or fall by more than any move in base rate.
A number of mortgage borrowers have fallen victim to lenders hiking their standard variable rates in recent years, despite the base rate remaining stable.
Never forget that without a Nationwide-style base rate lock guarantee, your SVR could be hiked at any time, as could a discount rate linked to it.
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