Every Friday, we take an overview of the mortgage market before rounding up the best rates with independent experts from Moneyfacts…
Brokers have warned of mortgage rate increases after higher-than-expected inflation reduced hopes of an interest rate cut in June.
Swap rates, which determine how much it costs lenders to lend, are likely to rise after April inflation came in at 3.5%.
“This increase is certainly going to stall the recent mortgage rate improvements, and with inflation due to stay above 3% for the rest of the year, it may be too much to expect further base rate cuts in 2025,” Justin Moy, managing director at EHF Mortgages, said.
“And that’s why mortgage rates will edge upwards in the next few weeks.”
For now, this is only a warning – in fact, several prominent lenders have cut their rates as they play catch-up with the most recent base rate cut from 4.5% to 4.25% earlier this month.
Santander cut its fixed rate deals by up to 0.19%, Virgin Money by up to 0.18% and HSBC by as much as 0.21%.
The overall average two-year fixed rate held firm at 5.11%, while the typical five-year fixed rate fell slightly to 5.07%, according to Moneyfacts.
Here are the lowest remortgage rates on the market…
Moneyfacts also picks out “best buys” that look beyond rates to take into account fees and incentives, which could come in handy if you have exhausted your savings for a deposit…
More mortgage market innovations
With lenders under continued pressure to get the housing market moving and boost growth, we saw more banks making changes to help people get on the property ladder.
Barclays reduced its stress tests, which are used to work out a borrower’s ability to keep up with the mortgage payments if interest rates increase.
The change means borrowers can borrow up to £30,750 more. Nationwide become the first major lender to relax its stress test rules last week.
“Lending more money isn’t just about profits, it’s about sensible risk assessment. With house prices high and rates falling, these changes make sense,” Sean Horton, managing director at advice firm Respect Mortgages, told Newspage.
Another innovation came from Gable Mortgages, which became the second lender to launch a 100% mortgage after the 2000s-reminiscent deal returned thanks to April Mortgages last week.
These enable buyers to purchase a property without having a deposit. The standard five-year fix is priced at 5.95%, while the new-build option has a rate of 5.65%.
While the rates might not sound too high in comparison to the current averages, they do also come with hefty fees starting at £2,095 and going up to £9,995. These fees cannot be added to the loan.
