If you’re thinking about purchasing a home, one of the first things you might consider is the current mortgage rates in the UK. Mortgage lenders regularly update their rates, making it essential to stay informed. To help you navigate this, we provide weekly updates on average mortgage rates and how they’ve changed. These updates also offer a comparison across various loan-to-value (LTV) percentages.

The Current Mortgage and Interest Rate Landscape

In recent months, there has been significant attention on changes to the Bank of England’s Base Rate and its impact on mortgage rates. The Bank of England (BoE) reviews the Base Rate approximately every six weeks to decide whether to increase, decrease, or maintain it. On November 7, the Base Rate was reduced to 4.75% after being held at 5% since August. However, inflation rose above the Bank of England’s 2% target in October, climbing to 2.3%.

Average Fixed Mortgage Rates

As of November 23, 2024, the average rate for a two-year fixed mortgage stands at 5.08%, showing no change from the previous week but reflecting a 0.51% decrease compared to last year. Meanwhile, the average rate for a five-year fixed mortgage is 4.86%, with a slight weekly increase of 0.01% and a yearly decline of 0.32%. These rates typically apply to mortgages with fees around £999.

The lowest available rates are also worth noting. For two-year fixed mortgages, the lowest rate is 4.22%, unchanged from the previous week but down by 0.56% from last year. For five-year fixed mortgages, the lowest rate is 4.14%, also stable weekly and reflecting a 0.29% yearly decrease.

Mortgage Rates by Loan-to-Value (LTV) Percentages

For borrowers with a 5-10% deposit, rates tend to be slightly higher. The average rate for a 95% LTV two-year fixed mortgage is now 5.65%, up by 0.02% from last week but 0.34% lower than last year. For five-year fixed mortgages at 95% LTV, the average rate is 5.34%, increasing by 0.04% weekly and down 0.18% yearly. At a 90% LTV, two-year fixed rates average 5.49%, while five-year fixed rates remain steady at 5.07%.

Borrowers with larger deposits, such as 15-25% or 40%, benefit from lower rates. At an 85% LTV, the average rate for two-year fixed mortgages is 5.10%, with a slight weekly increase of 0.01% and a yearly drop of 0.62%. For a 60% LTV, the average two-year fixed rate is currently 4.38%, unchanged from last week but down by 0.61% compared to last year. Similarly, five-year fixed rates for 60% LTV mortgages average 4.33%, reflecting a 0.02% weekly increase and a 0.29% yearly decrease.

When Could Mortgage Rates Begin to Drop?

Experts anticipate that the Bank of England will maintain the Base Rate at 4.75% in December, with further reductions expected in 2025. By autumn of 2025, the Base Rate could drop to around 4%, though this depends on broader economic conditions. Significant decreases in mortgage rates will likely depend on factors such as inflation trends, falling swap rates, and the absence of economic shocks.

Monthly Mortgage Repayments: What to Expect

Considering this week’s average mortgage rates, let’s examine what they mean for monthly repayments. The average asking price for a typical first-time buyer property is £225,340. For a five-year fixed mortgage at 85% LTV, repaid over 25 years, the average monthly payment is now approximately £1,104. This is a decrease from £1,138 per month a year ago, when the average first-time buyer property was priced at £223,426.

Determining How Much You Can Borrow

The amount you can borrow with a mortgage depends on an affordability assessment and the size of your deposit, expressed as the loan-to-value (LTV) percentage. A higher deposit leads to a lower LTV, which can result in more favourable interest rates. Conversely, smaller deposits result in higher LTVs and potentially higher rates.

This blog is for information purposes only, and its not to be taken as financial or mortgage advice. Please speak with your bank or an independent mortgage broker to seek professional advice when looking for a mortgage.