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What Are The Current 2024 UK Mortgage Rates?
If you’re in the market for a new home or property, you may be curious about the current mortgage interest rates in the UK.
Mortgage lenders tend to change their rates regularly, making it tricky to pinpoint the exact rate for your specific mortgage. Although, based on data from Rightmove, an example can be used.
The current average mortgage rate for a five-year fixed rate mortgage is 4.99%, down from 5.02% last week. The current average rate for a two-year fixed rate mortgage is 5.37%, down from 5.42% last week.
The lowest available five-year fixed rate is 4.23%, unchanged from last week, and the lowest available two-year fixed rate is 4.63%, down from 4.67% last week.
So, if you’re thinking about mortgaging or remortgaging, now is a great time to explore options and find the best deals to avoid missing out.
Are Interest Rates Rising In The UK?
Those looking for a new mortgage deal are crossing their fingers, hoping that the Bank of England’s most recent decision signals the end of a tough run of interest rate hikes.
For more than a decade, the Bank kept base rates very low, making borrowing affordable for more people. However, they’ve recently raised the Bank Rate in response to increasing inflation, largely due to high energy costs.
As of July 2024, the BoE base rate is 5.25%.
What does the interest rate rise mean for mortgages?
If you’re wondering whether the rise in interest rates means a rise in your mortgage, this depends on the type of mortgage you have.
- Fixed-rate mortgages: With a fixed-rate mortgage, you lock in a specific interest rate for a set period. This means you’re protected from these interest rate rises. However, once your fixed term is up, you may revert to the standard variable rate (SVR) offered by your lender, which follows the BoE base rate.
- Variable rate mortgages: A variable rate mortgage, on the other hand, can change over time. This means you’re likely to experience these rate rises in your monthly payments.
For those with a tracker mortgage, a product that follows the Bank of England’s Bank Rate, your mortgage rate will consistently move up or down alongside any changes in the base rate.
Discounted variable rate and standard rate mortgage deals may be affected by the increase in the BoE base rate, but this decision is ultimately up to your lender’s discretion.
How To Get The Best Mortgage Interest Rate
Before you leap into a mortgage application, you should ensure your finances are in good shape and that you meet the criteria lenders usually look for.
1. Choose a mortgage type that matches your financial situation
First, think about what kind of mortgage suits your situation. Are you a first-time buyer? Do you want to buy-to-let? Once you’ve identified the type, you’ll need to estimate how much you can actually borrow and what your monthly repayments might look like.
2. Keep your credit score in check
Your credit score and history play a crucial role in getting your mortgage approved. You want to make sure all the information in your credit report is accurate and that your credit rating (as well as that of any partner or spouse you’re buying with) is as strong as possible.
3. Pay down a big deposit
Saving up a substantial deposit is a key step, especially for first-time buyers. For existing homeowners, the equity in your current property can be used as a deposit.
The size of your deposit compared to the amount you plan to borrow determines your loan-to-value (LTV) ratio, which impacts the mortgage rates available to you.
Typically, the more you can put down upfront, the better the deal you can get. It’s a bit like showing you’re committed and less of a risk to lenders.
4. Shop around with multiple lenders
Don’t rush into the first mortgage offer that comes your way. By shopping around, you can explore the entire mortgage market to find deals that suit your specific needs.
Rates can vary quite a bit between lenders, even for the same type of mortgage.
5. Use a mortgage broker, get a mortgage online, or go direct
You have a few options for applying for a mortgage. You can use a mortgage broker who can help you find the right deal. Going straight to the mortgage lender (such as your bank) is another option, but remember, they only offer their products. There’s also the online route, which is incredibly convenient.
FAQs
How can I protect myself from rising mortgage interest rates?
To protect yourself, you may want to consider switching from a variable-rate mortgage to a fixed-rate one. This way, you can lock in a lower rate for a few years, such as two, three, or even five, depending on what works best for you.
What is a good interest rate for a mortgage?
There’s no fixed number for what makes a mortgage interest rate “good”. It really depends on your own financial situation and what mortgage deals are available right now. Ultimately, a “good” interest rate should allow you to comfortably manage your mortgage payments without putting your home at risk. It should also be competitive compared to what’s out there on the market.
Sources:
https://www.comparethemarket.com/mortgages/content/how-interest-rates-affect-mortgages/
https://www.nerdwallet.com/uk/mortgages/mortgage-rates/
https://www.mortgageable.co.uk/mortgages/current-mortgage-rates/
https://www.bankrate.com/uk/mortgages/
https://www.moneysupermarket.com/mortgages/mortgage-interest-rates/