Current Mortgage Rates in the UK

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Current Mortgage Rates in the UK
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Throughout the first half of 2023, average mortgage rates have been increasing as lenders respond to higher-than-expected inflation figures. This has a significant impact on potential homebuyers in the UK, as the rates have a huge effect on the affordability of buying a home.

Mortgage lenders change their rates regularly – so if you are thinking about buying a house in the UK right now, it is important that you are aware of the latest figures. The rates vary across a number of Loan to Value (LTV) percentages, so we’ve provided all the current information that you need in the blog below.

What are the current interest rates for mortgages?

On 12th June 2023, the current interest rates for UK mortgages (according to Mojo Mortgages) are as follows:

  • The average two-year fixed-rate mortgage rate in the UK is 5.63% (based on 75% LTV)
  • The average five-year fixed-rate mortgage rate in the UK is 5.14% (based on 75% LTV)
  • The average two-year variable-rate mortgage rate in the UK is 5.09% (based on 75% LTV)
  • The average standard variable rate (SVR) in the UK is 7.79%

Will UK interest rates ever go down?

Most economists expect UK interest rates to go down at some point in the next few years. While interest rates have been gradually increasing for some time now, to compensate for higher than expecting inflation, they are expected to decrease once inflation gets back under control.

There are varying views on exactly when interest rates will go down. It depends on a huge variety of economic and political factors, and it is therefore difficult to name a specific month or year. Nevertheless, as the Bank of England works hard to tackle inflation in the UK, it will hopefully be no more than a year or two before rates decrease.

Is it a hot or cold property market in the UK?

In June 2023, the property market is generally cold throughout the UK. While there are certain areas where activity is much higher than usual, it is generally the case that when mortgage rates are high, buyer activity is low. This is because securing a mortgage on a house is more expensive than usual. Therefore, the current market conditions may make it more difficult for you to sell your house fast.

Does it help if I put down a larger deposit?

No matter the market conditions, you will always be viewed upon favourably by lenders if you are willing to put down a larger deposit. In most cases, ‘large’ would be considered anything more than 20%. Your interest payments will typically be lower in this instance than if you hadn’t made such a sizeable deposit.

What is the UK record for interest rates?

The highest ever interest rates in the UK were 17%, which was recorded in 1979. Since then, rates have never been that high, and economists do not expect the figures to reach those same heights anytime soon.

It is highly recommended that you stay on top of current mortgage news whenever possible. If you are keen to buy or sell a property soon, having access to the latest data is essential.

Can I get a mortgage without a deposit?

It is not impossible to get a mortgage without a deposit in the UK, but it is very challenging to do so. There are a number of options available to you, although most of them require you to borrow money from other sources, which is then paid back at a later date.

Family link mortgage

A ‘family link mortgage’ is when a member of a family takes out a second mortgage on their property, which equates to 10% of your property value. This enables you to take out 90% on the property you wish to buy – and you then repay their 10% equity over 5 years, as well as the remainder of the 90% over your chosen term.

Using a personal loan as a mortgage deposit

You could take out a loan to pay your mortgage deposit. Some lenders will be willing to accept this, as long as they are confident that you will be able to afford your monthly mortgage payments. Your credit score and financial situation will make a big difference on how much they trust you.

Gifted deposits

A ‘gifted deposit’ is when someone gifts money towards a buyer’s deposit. In most cases, this will be done by a family member or friend. This hopefully makes it less likely that you can’t pay your mortgage.

Guarantor mortgages

A ‘Guarantor mortgage’ is when a family member or close friend secures your mortgage against savings or a property they own. It can also be achieved by placing funds equal to the required deposit amount in a savings account held by the mortgage provider.

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