Lenders follow Bank of England and hold mortgage rates

Yahoo

19-06-2025

Most lenders opted to maintain their mortgage deals as the Bank of England (BoE) decided to hold interest rates on Thursday, but experts expect more sub-4% offers in the coming weeks.
The average rate for a two-year fixed mortgage stands at 4.89%, while five-year fixed deals average 5.19%, according to data from Uswitch.
The Bank of England has kept interest rates at 4.25% amid inflation fears, delivering a blow to homeowners who were expecting a relief in their mortgage. However, industry experts are not giving up hope yet.
Tom Davies, group financial services managing director at LRG, said: "For prospective buyers, the key question shouldn't be, 'Will the rate fall again soon?' but, 'Can I afford to buy now, and is the right property available?'. Today that answer is more often yes than no. Buyers who wait for the perfect moment may find it never arrives — or that it passes them by.
"What matters now is a functioning, competitive mortgage market with realistic pricing and good choice. That's a strong foundation: a good environment for anyone looking to move or invest."
Matt Thompson, head of sales at estate agency Chestertons, said: 'Some buyers paused their property search in the hope for another interest rate cut and a more varied selection of mortgage products but higher-than-expected inflation has diminished those odds for the time being.
"We have recently seen some lenders increase the cost of their fixed-rate deals but there are still sub-4% options available which will encourage some house hunters to resume their search over the coming weeks.'
Read more: UK house price growth halves after stamp duty break end
The primary inflation measure, the Consumer Price Index (CPI), stood at 3.4% in the 12 months to May, a slowdown from the previous month. However, price increases are still well above the BoE's 2% target.
This week among the major lenders only Halifax reduced rates, as most banks decided not to touch their mortgage deals.
HSBC (HSBA.L) has a 4.01% rate for a five-year deal, unchanged from the previous week. For those with a Premier Standard account with the lender, this rate is 3.98%.
Looking at the two-year options, the lowest rate is 3.99% with a £999 fee, also unchanged from the previous week.
Both cases assume a 60% loan-to-value (LTV) mortgage, meaning buyers need to have at least 40% for a deposit.
HSBC offers 95% LTV deals, meaning you only need to save for a 5% deposit. However, the rates are much higher, with a two-year fix at 5.05% or 4.89% for a five-year fix.
This is because their financial situation and deposit size determine the rate someone can get. The larger the deposit, the lower the LTV, allowing buyers to access better deals because lenders consider them less risky.
NatWest's (NWG.L) five-year deal is 3.95% with a £1,495 fee, untouched from the previous week.
The cheapest two-year fix deal is 3.2%, again the same as last week. You'll need at least a 40% deposit to qualify for the rates in both cases.
At Santander (BNC.L), a five-year fix is 4.08%% for first-time buyers, the same as before. It has a £999 fee, assuming a 40% deposit.
Read more: Number of million-pound homes for sale in Britain doubles since 2019
For a two-year deal, customers can also secure a 4.01% offer, with the same £999 fee, again unchanged.
However, the lender has cut a raft of deals for first-time buyers:
90% LTV two-year fixed rate with a £0 fee and £250 cashback. Rate reduced by 0.15% to 4.73%.
95% LTV two-year fixed rate with a £0 fee and £250 cashback. Rate reduced by 0.14% to 5.00%.
90% LTV five-year fixed rate with a £999 fee and £250 cashback. Rate reduced by 0.10% to 4.47%.
95% LTV five-year fixed rate with a £0 fee and £250 cashback. Rate reduced by 0.22% to 4.85%.
The new pricing is available to all customers, whether they are applying via a broker or directly, under Santander's "no dual pricing" pledge.
Barclays (BARC.L) was the first among major lenders to bring back under-4% deals and currently has a five-year fix at 3.99%, unchanged from last week. For "premier" clients, this rate drops to 3.98%.
The lowest for two-year mortgage deals is 3.97%, also unchanged.
Barclays last month launched a mortgage proposition to help new and existing customers access larger loans when purchasing a home. The initiative, known as Mortgage Boost, enables family members or friends to effectively "boost" the amount that can be borrowed toward a property without needing to lend or gift money directly or provide a larger deposit.
Under the scheme, a borrower's eligibility for a mortgage can increase significantly by including a family member or friend on the application. For example, an individual with a £37,500 annual income and a £30,000 deposit might traditionally be able to borrow up to £168,375, enabling them to purchase a home priced at around £198,375.
However, with Mortgage Boost, the total borrowing potential can rise substantially if a second person, such as a parent, joins the application. In this case, if the second applicant also earns £37,500 a year, the combined income could push the borrowing limit to £270,000, enabling the buyer to afford a home worth up to £300,000.
Nationwide's (NBS.L) lowest mortgage rate for first-time buyers is 4.24% for a five-year fix, which is the same as before.
First-time buyers are currently looking at 4.04% for a two-year fix, again no changes from the previous week.
Read more: Average UK house asking price drops by more than £1,000
The lender has adjust its mortgage affordability calculation by reducing stress rates by 0.75 and 1.25 percentage points, helping applicants borrow more, whether buying a first home, moving, or remortgaging.
Applicants can borrow, on average, £28,000 more; however, in some remortgage cases, customers could borrow up to £42,600 more.
Nationwide also reduced its standard stress rate and the rate applied to eligible first-time buyers and home movers fixing their deal for at least five years.
Halifax, the UK's biggest mortgage lender, offers a five-year rate of 4.03% (also 60% LTV), untouched from last week.
The lender, owned by Lloyds (LLOY.L), offers a two-year fixed rate deal at 3.97%, with a £999 fee for first-time buyers, lower than the previous 4%.
It also offers a 10-year deal with a mortgage rate of 4.78%.
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Halifax has enhanced its five-year fixed mortgage products by increasing borrowing capacity. This improvement allows borrowers to access up to £38,000 more, enabling them to secure larger mortgages based on individual incomes.
Rachel Springall, finance expert at Moneyfacts, said: "The flourishing choice of low-deposit mortgages will no doubt be welcomed by borrowers looking to remortgage or are a first-time buyer.
"The government has been clear that it wants lenders to do more to boost UK growth, and so a rise in product availability for aspiring homeowners is a healthy step in the right direction."
NatWest's currently offers some of the lowest rates, with a five-year fix coming in at 3.95% and a two-year deal at 3.92%. However both require a hefty 40% deposit.
The average UK house price is £297,781, so a 40% deposit equals about £120,000.
A growing number of homeowners in the UK are opting for 35-year or longer mortgage terms, with a significant rise in older borrowers stretching their repayment periods well into their 70s.
Read more: UK inflation slows to 3.4% in May as transport costs ease
Lender April Mortgages offers buyers the chance to borrow up to six times their income on loans fixed for five to 15 years, from a deposit of 5%. Both those buying alone and those buying with others can apply for the mortgage.
As part of the independent Dutch asset manager DMFCO, the company offers interest rates starting at 5.20% and an application fee of £195.
Skipton Building Society has also said it would allow first-time buyers to borrow up to 5.5 times their income to help more borrowers get on the housing ladder.
Leeds Building Society is increasing the maximum amount that first-time buyers can potentially borrow as a multiple of their earnings with the launch of a new mortgage range. Aspiring homeowners with a minimum household income of £40,000 may now be able to borrow up to 5.5 times their earnings.
Mortgage holders and borrowers have faced record-high repayments in recent years, as the Bank of England's base rate has been passed on by banks and building societies.
According to UK Finance, 1.3 million fixed mortgage deals are set to end in 2025. Many homeowners will hope the Bank of England acts quickly to cut rates more aggressively. At the same time, savers will likely root for rates to remain at or near their current levels.
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