What next for UK mortgage rates? – Forbes UK consultant


The ever-worsening cost-of-living crisis and persistently rising inflation – which stood at a staggering 9% in the 12 months to April – are raising the likelihood of further rate hikes this year and putting further pressure on the monthly budgets of millions of UK homeowners’ mortgage loans .

What happens to the interest?

The Bank of England raised interest rates to 1% on May 5th. It was the fourth increase since December 2021, when the base rate was just 0.1% and will add around £300 a year to the cost of a £200,000 mortgage (adjustable rate of 2.25%).

The next interest rate decision will come on June 16, when the bank may hike rates again in the ongoing fight against inflation, which – according to the latest figures for April – is showing little sign of abating.

Existing interest rate mortgages from the bank, such as

In addition to higher mortgage rates, those looking to buy their first home are also facing asking prices that were 10.2% higher in May than 12 months ago, according to Rightmove’s latest home price report.

Two- and five-year fixed rates

According to mortgage brokers, including our partner Trussle, more and more homeowners are choosing longer-term fixed-rate mortgages in the ‘bid for stability’, with five-year maturities being particularly popular.

But while historically borrowers would pay more for five years than for two years, the price gap is closing. In fact, Halifax offers a five-year fixed-rate mortgage that is cheaper than its two-year fixed-rate equivalent. The “fee-free” five-year fix is ​​2.93% for borrowers with a deposit of 40% or more, compared to a rate of 3.01% for the same deal over two years.

For more mortgage news, visit our Mortgage Updates page. And to see what deals are available today for your deposit level and circumstances, check out our mortgage charts below.

Why are interest rates rising?

The Bank of England’s Monetary Policy Committee (MPC) is using rate hikes as a tool to cool the economy and tame rising inflation. And the consumer price index (CPI), a measure of inflation, rose 9% in the 12 months to April 2022, marking its highest level in 40 years.

It reflects both uncertainty surrounding the Russian invasion of Ukraine and the UK’s energy price cap, which rose 54% in April, resulting in higher energy bills for millions of homes. The cap will be raised again in October when analysts are forecasting at least a further £500 to be added to the cost of a typical annual energy bill.

What are mortgage rates today?

With bank rates and inflation fluctuating frequently, it’s difficult to keep track of mortgage costs – especially as they can change on a daily basis. A simple way is to use our mortgage tables provided by Trussle – a trusted online mortgage broker and our mortgage partner.

To find out what offers are available at today’s rates for the type of mortgage you are looking for, you need to fill in your personal criteria in the table below. Here’s what to do:

  • Choose whether to mortgage finance a home purchase or if there is one rescheduling for an existing property
  • Enter the property value and the mortgage amount you need. This automatically generates a percentage called the “Loan to Value.” The lower your loan-to-value ratio, the cheaper the mortgage rates available
  • Tick ​​the appropriate box if it is a Buy-to-let or interest rate mortgage (You need a repayment strategy for these deals) or if you are looking for a mortgage to fund one shared ownership Property
  • Finally, filter your search by type of mortgage For example, you might want a two-year or five-year fix or tracker. The filter is set to a total mortgage term of 25 years, but you can change this if you wish.

What else should I know?

Mortgage offers with the cheapest interest rates usually come with fees. You can either pay these in advance or add them to the loan. To account for the cost of the fee, order the results by Initial Period Cost (in the Sort By drop-down list).

Alternatively, you can rank the results by initial rate, lowest fee, or monthly repayment – even by the lender’s “following rate” that the deal reverts to at maturity.

While mortgage rates change daily, the cheapest are reserved for larger deposit amounts, typically 60% of the property’s value or more. And in all cases, you need sufficient income and good credit to be accepted for a mortgage.

If you’d like to see what your monthly mortgage payments might look like in different scenarios while being overlaid with household bills, our mortgage calculator calculates the totals.

While Trussle lists around 12,000 mortgage deals from 90 lenders — which makes up the vast majority of the market –– occasionally some deals are exclusively available through a handful of brokers, so you might not see them listed.

When can I start a debt restructuring?

Mortgage offers from the major lenders typically have a six-month term (as detailed in our Best Lenders For Remortgaging), although some lenders limit the expiration date to three months. It pays to look for a new mortgage deal that far in advance because you can lock in an interest rate like what you see today – for free and with no strings attached.


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