Are you coming to the end of your mortgage deal or are looking to buy a new home? What does the change in the Base Rate to 5% mean for mortgage rates?

There has been significant discussion about Base Rate rises and their potential impact on mortgage rates. The Bank of England meets every six weeks to determine whether the Base Rate should go up, down, or remain the same. In June, the Base Rate increased from 4.5% to 5%.

According to our Rightmove’s mortgage expert, Matt Smith, "Rates have continued to rise this week due to disappointing inflation numbers. The Bank's expectation of inflation easing in the second half of the year is reflected in the difference between 2-year and 5-year fixed deals, with the former experiencing a larger average increase."

While prospective mortgage applicants may find these increases concerning, it's worth noting that swap rates (the underlying costs for lenders) have remained relatively stable since the Base Rate announcement. This suggests that while short-term increases may still occur during this adjustment period, the pace of change is expected to slow down, particularly for five-year fixed-rate products. Hopefully, this will bring the desired period of stability in the medium term.

Now, let's delve into the specific current mortgage interest rates in the UK as of Tuesday, 27th June 2023:

🔹 Average fixed-term mortgage rates for home-buyers with 5-10% deposits:

95% LTV: 2-year fixed - 6.62%, 5-year fixed - 5.87%

90% LTV: 2-year fixed - 6.09%, 5-year fixed - 5.67%

🔹 Average fixed-term mortgage rates for home-buyers with 15-25% deposits:

85% LTV: 2-year fixed - 5.93%, 5-year fixed - 5.50%

75% LTV: 2-year fixed - 5.77%, 5-year fixed - 5.36%

🔹 Average fixed-term mortgage rates for home-buyers with 40% deposits:

60% LTV: 2-year fixed - 5.67%, 5-year fixed - 5.26%

*The above rates are for illustrative purposes only and were accurate at the time of writing this blog.

You may be wondering how these rates translate into monthly mortgage repayments. For instance, on a first-time buyer property with a five-year fixed, 85% LTV mortgage, the average monthly payment is now £1,182**. This represents an increase of £22 per month compared to the previous week.

When it comes to borrowing with a mortgage, your affordability and interest rate are influenced by the deposit you have, known as loan-to-value (LTV). To estimate how much you can borrow, utilise a mortgage calculator. Additionally, consider applying for a Mortgage in Principle to obtain a personalised result that brings you closer to a mortgage offer. Alternatively, you can speak with a mortgage broker who can assist you and look at the whole of the market.

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