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As banks fear soaring energy prices will hammer borrowers… Halifax’s big idea to keep mortgages booming: larger loan if you’ve got a greener home










Halifax is launching a ‘green test’ that will mean struggling borrowers with energy-efficient homes can access larger mortgages, The Mail on Sunday can reveal

The test means the lender, part of Lloyds Banking Group, will be able to examine whether buyers of ‘green’ homes may have extra disposable income because their energy bills will be lower. Evidence of the surplus monthly cash could help them qualify for a mortgage to get them on to the housing ladder or move to a bigger home. 

The initiative comes as banks scramble to find safe ways of lending to borrowers who are coming under pressure from surging energy bills and soaring inflation, which last week reached its highest level in three decades. 

Looking ahead: Halifax is launching a 'green test' that will mean struggling borrowers with energy-efficient homes can access larger mortgages

Looking ahead: Halifax is launching a ‘green test’ that will mean struggling borrowers with energy-efficient homes can access larger mortgages

Banks are wary of lending to borrowers who may not be able to keep making loan repayments if the cost of living rockets. All banks still limit the amount customers can borrow based on their income, often to four or five times their annual salary. 

It is understood the ‘green test’ is designed for hard-pressed borrowers who might scrape through the bank’s affordability test, giving them a greater chance of being able to borrow more. 

Homes are given an ‘energy performance certificate’ with ratings from A to G depending on the property’s energy efficiency. Efficient homes with an A or B rating – which includes more than 80 per cent of homes built last year – will fare better on the bank’s ‘green test’ than households facing high gas bills. 

Ray Boulger, technical manager at mortgage broker John Charcol, said: ‘If you’ve got lower heating costs, it could mean you can get a larger loan on the basis that your monthly costs are less. The people who will benefit from this initiative are those with higher financial commitments.’ 

Households are facing a huge jump in energy bills from April when the energy price cap is expected to rise by 50 per cent – adding about £600 a year to the average annual bill. Emma Pinchbeck, chief executive of trade body Energy UK, warned last week that bills could go up again in October by at least another 20 per cent. 

The Social Market Foundation has urged Chancellor Rishi Sunak to give people a ‘cost of living bonus’ to help combat soaring inflation and sky-high energy bills. The Government is examining a range of options to assuage what has been dubbed ‘the cost of living crisis’, including loans to energy firms. 

The Halifax initiative is part of a push by banks to adjust their affordability criteria so customers can still borrow but without taking on too much risk. 

The rise in the Bank of England base rate last month has led to banks increasing their ‘stress test’ rate, to check borrowers can pay their standard variable interest rate plus three percentage points. TSB wrote to brokers last week noting it had increased its stress test by 0.15 of a percentage point, in line with the base rate rise. 

Interest rates on mortgages are also rising across the board. Data from comparison site Moneyfacts show that interest rates have gone up on five-year fixed rate deals, from an average of 2.66 per cent at the start of the year to 2.7 per cent. The average rate on three-year fixed loans has gone up from 2.32 per cent to 2.47 per cent. 

Signs are emerging that banks are wary of taking on too many risky new loans. A source close to Barclays said the lender had increased rates on some products and removed others to ‘stem the flow’ of loans. But some banks are offering better rates in certain segments of the market where they want to increase lending. 

Last week, HSBC cut rates on five-year fixed-rate deals at 90 per cent loan-to-value to 2.19 per cent. It has also brought back a sub 1 per cent mortgage rate on a two-year tracker deal, but only for 60 per cent loan-to-value deals – that is where the borrower has 40 per cent equity in the property. 

Bank of England Governor Andrew Bailey told MPs last week that higher inflation could last longer than many forecasters had anticipated. Some economists now believe the base rate could rise from its current 0.25 per cent to 1.25 per cent by November. 

Global demand and supply chain woes are likely to continue, exacerbating food price increases. Goldman Sachs bank has warned that strong wage growth and higher prices could lead to spiralling inflationary pressures, putting a further squeeze on living standards. 

Steve Webb, a partner at consultancy LCP and a former Pensions Minister, warned that older people would be especially hard hit. He said: ‘In addition to the rising cost of the weekly shop or filling a car with petrol, pensioners are likely to be particularly hard hit by a hike in council tax bills in April and by the surge in energy costs.

‘Elderly pensioners are likely to be particularly hard hit, as they may have the heating on for most of the day. The planned State Pension increase of just 3.1 per cent is nowhere near the true increase in the cost of living which most pensioners will face this year. 

‘Unless further action is taken, millions of pensioners will face a real financial squeeze and will be forced to cut back on essentials just at a time in their life when they should be able to relax and enjoy themselves.’

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After years of dirt-cheap rates and huge loans up for grabs, this year’s cost-of-living crisis could see mortgage lenders finally tighten the purse strings.

First-time buyers and families stretching their budgets for larger properties are likely to be hit as lenders rein back on the size of loans they are willing to hand out.

Households are already braced for a big squeeze, as energy bills and inflation skyrocket and the new health and social care levy tears a chunk out of pay packets.

Crunch time: Households are braced for a big squeeze as energy bills and inflation skyrocket, and the new health and social care levy tears a chunk out of pay packets

This week, it has been reported that HSBC is thinking of tightening up on lending, while the price of wholesale gas is tipped to send the average annual energy bill to £2,000.

Here, Money Mail looks at how the big squeeze of 2022 could hit your property prospects — and how you can still beat rising bills by finding a better mortgage deal.

Crunch time

Economists expect household spending to be an extra £2,440 this year, compared with before the pandemic, the Mail reported this week.

Families are also braced to lose 1.25 per cent of income to the rise in National Insurance, which means the squeeze on the average household could be more than £3,000.

The crunch comes after house prices rose by more than 10 per cent last year. Experts say this — coupled with tougher lending — could mean first-time buyers find it even harder to get on the property ladder.

When making a mortgage offer, banks consider your employment status, expenditure and credit history, as well as inflation data from the Office for National Statistics (ONS).

Fresh ONS figures are due to be released today and could mean banks start to become more cautious.

But experts say the real impact of the cost-of-living crisis will be clear in borrower bank statements, which underwriters scour before finalising a home loan. 

Matt Coulson, director at mortgage firm Heron Financial, says: ‘Lenders won’t be able to continue with their current affordability calculations when we get the new ONS data, which will show the cost of living is increasing fairly rapidly.’

Dream flat may be out of our reach 

First-home fight: Tara Clee, 25, and George Irwin, 28, fear the cost of living crunch could set them back

First-home fight: Tara Clee, 25, and George Irwin, 28, fear the cost of living crunch could set them back

Tara Clee, 25, and George Irwin, 28, have saved £30,000 for their first home. But they fear the cost-of-living crunch could set them back.

Over the past six months, Tara, who works for an investment firm, and her partner George have been looking to buy a two-bed flat in Bristol for about £300,000.

But while lenders have told them they should be able to afford a £270,000 home loan on their current income, they have yet to find the right property.

Tara fears that the cost of borrowing could become more expensive for them as inflation soars.

She says: ‘We are still looking, but it’s impossible to know what kind of mortgages will be available when we eventually find a flat.’

He says first-time buyers and families looking to borrow as much as possible would miss out as a result, and adds: ‘If living expenses rise by £3,000 a year, that could impact someone’s borrowing by around £10,000 to £15,000. 

This might not be the end of the world for some, but if you’re a first-time buyer who has cobbled together everything for a 5 per cent deposit, it could be the difference between buying and not.’

Doug Miller, of broker Lansdown Financial Services, agrees: ‘As monthly outgoings increase, mortgage lenders have a duty to ensure their affordability checks factor this in.

‘For people who have small amounts of disposable income available each month, applying for a mortgage will become tougher than ever this year.’ 

Mortgage adviser Jane King, of Ash-Ridge Private Finance, says: ‘If the cost of living rose by £3,000, between 15 per cent and 20 per cent of my first-time buyers would struggle to secure a mortgage compared with last year.

‘The people worst affected would be the “second-steppers” who have two children of school and nursery age and who want to remortgage.

‘They will have to pay extra for food, children’s clothes and nursery fees, which could mean they struggle to pass new affordability checks if they want to move banks.’

Pressure: Economists now expect household spending to be an extra £2,440 this year compared to before the pandemic, the Mail reported this week

Pressure: Economists now expect household spending to be an extra £2,440 this year compared to before the pandemic, the Mail reported this week

Deals derailed?

Buyers are asked to secure an ‘agreement in principle’ before making an offer on a home. 

This mortgage deal is then processed by underwriters before it is secured — meaning that if lending criteria change, you may not be able to borrow as much as first thought. The offers also expire after between 60 and 90 days.

Experts warn that buyers with an initial mortgage offer may later find the amount is reduced if the impact of the cost-of-living crisis is clear in their outgoings.

Chris Sykes, at broker Private Finance, says: ‘Borrowers could have a shock if they got their agreement in principle last year because they were planning to buy but didn’t, and assumed they could still get that level of borrowing but now can’t. 

If you have talked to a lender or broker and been advised of your borrowing power, be aware that it can change.

‘Have another conversation with them before putting an offer on a house, to make sure you are still eligible for that loan amount.’

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, says: ‘There are two mortgage problems you can face when your expenses rise. The first is that you can’t borrow as much, pushing you out of the price bracket you were house-hunting in.

‘The second is that your expenses become such a large proportion of your income, you will struggle to find anyone to lend to you at all.’

She says a buyer with an annual salary of £30,000 and outgoings of £950 a month would be rated as an ‘amber’ risk by a lender for a £102,900 home loan at 3 per cent over 25 years. This is because expenses outside their mortgage would make up 52 per cent of their budget.

But if their expenses rose by £250 a month, as predicted, they could only borrow £92,400 — and with those extra expenses eating up 62 per cent of their income, they would be deemed a very high risk of overstretching themselves.

This means they would probably struggle to secure even a £92,400 loan, she says.

Experts warn that buyers with an initial mortgage offer may later find the amount is reduced if the impact of the cost-of-living crisis is clear in their outgoings

Experts warn that buyers with an initial mortgage offer may later find the amount is reduced if the impact of the cost-of-living crisis is clear in their outgoings

Loose loans

The Bank of England is considering relaxing the mortgage affordability test banks have to use, which could make it easier for first-time buyers to get on the property ladder.

But until the guidance is updated in their favour, borrowers with small deposits and limited income are likely to find it harder to buy than before as living costs soar.

The affordability test, brought in after the financial crisis, checks if a borrower can afford to pay the lender’s standard variable rate plus 3 per cent. 

Other rules mean most lenders will only offer a mortgage worth 4.5 times the borrower’s salary.

But others are willing to offer wealthy buyers loans worth far more. Online firm Habito announced last month that it was dishing out to some customers loans worth up to seven times their salary.

Figures from the City watchdog, the Financial Conduct Authority, show lenders handed out 2,742 mortgages worth 6.5 times a borrower’s salary in the first six months of 2021 — an increase of 138 per cent compared with 2019.

Brokers say such rates are likely to remain open for those with high salaries and no debt, but that those on tight budgets who are hardest hit by inflation could miss out.

Laura Suter, head of personal finance at AJ Bell, says: ‘Until any changes happen, the combination of stricter affordability rules, rising costs and tax hikes eating away at salaries mean many people wanting to get on the property ladder for the first time, or to upsize, may find their borrowing ability is far lower than they would expect.’

Broker Mr Coulson adds: ‘The Bank may have to rethink its decision to withdraw the stress test.’

Rates on the rise

Last month, the Bank of England increased the base rate from a record low of 0.1 per cent to 0.25 per cent, and further rises are expected in 2022 to help tame inflation.

But any rise in the base rate means mortgage repayments become more onerous for millions on variable rates and tracker deals.

Figures from broker L&C Mortgages show that if the base rate rose to 1 per cent, a household with a £200,000 mortgage would need to shell out an extra £1,200 per year compared with before the pandemic.

Many households could struggle to meet mortgage repayments.

Savings possible

Aanalysis from L&C shows that last year, a typical monthly mortgage payment of about £800 was around seven times the average energy bill of £112.

David Hollingworth, from L&C, says borrowers who find a good mortgage deal could wipe out any increase in heating and power costs. 

The firm’s sums show that remortgaging from an average standard variable rate of 3.91 per cent to the top two-year fixed rate of 1.36 per cent would save £2,200 a year on a £150,000 home loan.

Mr Hollingworth says that cutting your mortgage rate by just 0.65 per cent would offset the predicted £600 annual rise in bills.

Katie Brain, of analysts Defaqto, says those preparing to take out a mortgage should try to clear any unsecured debt or at least ensure payments are up to date, and limit non-essential spending such as on takeaways and gym membership.

b.wilkinson@dailymail.co.uk

Best mortgages

Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.

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HSBC could change mortgage affordability checks to reflect rising cost of energy bills and its detrimental impact on household finances

  • Lender considering stricter tests for borrowers, according to reports
  • This could affect the size of the mortgage they can borrow
  • Gas price crisis has driven up cost of living for many households
  • Higher bills could potentially affect their ability to pay a mortgage  










A major mortgage lender is considering imposing stricter affordability tests on borrowers in response to the rising cost of living.

HSBC could alter the way it calculates the size of the mortgage households are able to borrow, according to the Sunday Telegraph.

This would take into account the huge rises in energy bills in recent months, which have driven up outgoings for many households.

Energy bills have risen significantly in recent months, increasing the burden on households

Energy bills have risen significantly in recent months, increasing the burden on households

This additional cost could potentially affect their ability to pay a mortgage.

The cost of energy bills has risen hugely over the past few months, due to a global crisis in the supply of natural gas.

The chief executive of Energy UK has said that bills could rise by as much as 50 per cent in the spring, when Ofgem will review its energy price cap. It currently sits at £1,277.

When considering an applicant for a mortgage, banks take into account their monthly income and outgoings, including energy bills, to make sure they can afford the repayments.

They often use an algorithm to determine what size mortgage a customer can afford.

HSBC said it would not comment on speculation, but a spokesman added: ‘Our mortgage lending decisions are based on affordability.

‘As a responsible lender, we keep our underwriting criteria under review and our affordability models are refreshed regularly, taking in to account key elements of consumer expenditure.

‘We would always encourage people to have a healthy relationship with their money and keep an eye on their finances, so when it comes to getting a first mortgage or remortgaging their finances are in good shape.’

HSBC pointed to guidance it recently published for customers regarding how to save money on their energy bills.

In a post on its website, the bank suggested that customers could get a smart meter or apply for a government support scheme.

It also suggested switching energy supplier, despite switching being at a record low. 

At present, many customers will not save any money by doing this, as dropping on to a default tariff is often cheaper than signing up to a fixed deal with a new supplier. 

This is because default tariffs are protected by Ofgem’s price cap.  

Although it is not clear what HSBC’s potential stricter lending criteria might be, tightening regulations would appear to be at odds with recent plans from the Bank of England.

In December, it announced that it would consult on whether to remove the rate rise stress test that banks must impose on mortgage borrowers, which would make it easier to get a bigger loan.

The Bank will consult on scrapping the rule which requires applicants – whatever the initial rate they are applying for – to prove they could pay their lenders’ higher standard variable rate of interest, plus 3 per cent.

The affordability test, also known as a reversion rate, is designed to check that borrowers could still meet their mortgage payments in the event of a rate rise.

Mortgage experts have warned that doing so would also send house prices even higher than they are already. 

Best mortgages

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Baillie Gifford’s flagship investment trust has been one of the best performing investments over the past few years.

Scottish Mortgage’s exposure to high-growth stocks like Tesla has seen it return 300 per cent over the past five years, while the FTSE All-Share Index has returned just 10 per cent over the same period.

However, the trust has underperformed over the past six months and a further tech sell-off has seen its share price fall more than eight per cent since the start of the year.

Scottish Mortgage fund manager James Anderson, who is set to leave in April, made early bets on Tesla and Alibaba

Scottish Mortgage fund manager James Anderson, who is set to leave in April, made early bets on Tesla and Alibaba

Scottish Mortgage has a strong track record when it comes to investing in high-growth companies. 

Fund manager James Anderson, who is set to leave in April, made early bets on Tesla and China’s Alibaba, which it still holds. 

But it has had a tough time in recent months. Since the start of December, its share price is down 18 per cent while its net asset value (NAV) is down almost 16 per cent.

‘It has been de-rated a little, with a move from a 2 per cent premium to a 1 per cent discount, but the main driver of its recent decline has been the performance of some of its key holdings,’ says Simon Elliott, head of research at Winterflood.

Since the end of November, Moderna, which is the trust’s largest holding, has seen its share price fall 40 per cent. 

Other top 10 holdings that have struggled include Ginkgo BioWorks (-43 per cent), Delivery Hero (-29 per cent) and NIO (-27 per cent).

Technology stocks do well when capital is cheap so it is no surprise there has been a shift away from growth stocks in recent months, which has in turn affected the value of the trust.

Since the start of 2022 there has been a particularly sharp sell-off of tech stocks, including Tesla whose share price has sunk 11 per cent, in the wake of the latest Federal Reserve meeting minutes.

Ark Invest’s Innovation ETF, which is seen by some as a good indicator of the health of US tech, is also down nearly 12 per cent this year.

Fed officials have indicated they are considering quantitative tightening – a reversal of its huge stimulus programme – shortly after raising interest rates. 

The central bank had already intended to wind down its quantitative easing programme but it now looks to be moving far quicker in the face of high inflation.

QE – which sees the Fed buy bonds to increase money supply – has helped stock markets and helped to flood the financial system with liquidity.

‘This has particularly turbocharged “growth” stocks in areas like technology, communications services and e-commerce, by keeping borrowing costs incredibly low. 

‘That’s because investors typically assess the present value of fast growth companies on what their future earnings over several years are worth paying for today,’ says Jason Hollands, managing director of Bestinvest. 

‘Many fast growth companies have also benefitted from borrowing inexpensively to fund their expansion, as well as use this finance to buy-back their own shares and boost their stock prices.’ 

The high-growth tech stocks favoured by Scottish Mortgage are particularly sensitive to policy tightening and rising interest rates, given their valuations are dependent on potential future earnings.

What should investors do?

Investors may be alarmed by an 18 per cent share price decline over a five week period but it does reflect the trust’s general investment approach.

‘High growth, disruptive companies can often see share price volatility and this will periodically have a short-term impact on Scottish Mortgage’s performance. 

For investors to benefit from Scottish Mortgage’s investment approach, they have to be prepared to hold its shares for a long period and grit their teeth during the tougher times.

Simon Elliott – Winterflood

‘However, the rationale is that over the long-term the exceptional growth experienced by these portfolio companies will lead to high returns,’ says Elliott.

‘It is worth noting, for instance, that despite its recent struggles Moderna’s share price is still up nearly 1,000 per cent since the start of 2020. 

‘For investors to benefit from Scottish Mortgage’s investment approach, they have to be prepared to hold its shares for a long period and grit their teeth during the tougher times.’

Investors with exposure to technology may face further turbulence as the Fed moves to taper its stimulus programme and raise interest rates.

Hollands says: ‘For investors heaving exposure to “growth” funds and who are overweight the US and tech, now is the time to consider taking a more measured approach, reallocating some of their investments to dividend generating companies, sectors like financials and commodities and topping up exposure to the UK equity market, where valuations are a lot more reasonable.

‘Funds to consider include Fidelity Special Situations, Artemis UK Select and – for income seekers – Threadneedle UK Equity Income and Jupiter Income.’

Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.

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Mortgage rates are increasing for most borrowers following a rise in the Bank of England’s base rate.  

The Bank decided to raise the base rate from 0.1 per cent to 0.25 per cent in mid-December, in a bid to curb rising inflation.

However, lenders were already edging up mortgage rates in anticipation of the move. 

According to the latest data from financial information service Moneyfacts, the average two-year and five-year fixed rate both increased for the third consecutive month in January, reaching 2.38 per cent and 2.66 per cent respectively. 

This follows months of record lows in summer 2021, when fixed-rate mortgages for those with lots of equity or big deposits went sub-1 per cent in some cases.  

Borrowers have a wide choice of mortgages, and rates are very competitive for those with large deposits to put down - in some cases lower than 1 per cent

Borrowers have a wide choice of mortgages, and rates are very competitive for those with large deposits to put down – in some cases lower than 1 per cent 

For those with a 40 per cent deposit, the lowest fixed rate available is currently 1.10 per cent on a two-year fix with Barclays, a deal which comes with a £999 fee. 

Rates increased across all deposit sizes, apart from 5 per cent deposit mortgages which are still seeing rates fall in some cases after months of them remaining stubbornly high. 

Average two- and five-year fixed rates on mortgages with 5 per cent deposits fell for the ninth consecutive month in January, according to Moneyfacts. 

At 3.06 per cent and 3.33 per cent respectively,  these averages are the lowest on Moneyfacts records going back to 2011.

That said, these rate decreases will not last forever, and borrowers with small deposits could also see rates rise in the near future. 

Borrowers should think twice before picking the lowest-interest deal, as the fees can sometimes make the mortgage more expensive than a higher-rate product over the life of the fix. 

First-time buyers have more choice than at the start of the pandemic, but rates are still high

First-time buyers have more choice than at the start of the pandemic, but rates are still high 

There are still tracker mortgages available with rates as low as 0.99 per cent, but with the base rate possibly set to increase further in 2022, borrowers run the risk that the cost of their monthly payments could rise substantially. 

This is because the interest rates on trackers are set at a certain level above the base rate, and if that rises, so will they.

The average rate for term tracker mortgage products rose in line with the base rate in January according to Moneyfacts, going up by 0.15 per cent to 3.53 per cent.

The average two-year tracker rate also rose by 0.17 per cent to sit at 1.75 per cent, though it is still 0.62 per cent lower than it was a year ago. 

While fixed mortgage rates are heavily influenced by the base rate, that link is not automatic, and borrowers on fixed terms are protected from rises until their deal comes to an end.

What does the base rate rise mean for my mortgage?  

The Bank of England’s base rate had been at a historically low 0.1 per cent since the early days of the pandemic. 

But the Bank has now increased that to 0.25 per cent, in order to curb rising inflation. There is also speculation that there could be further rises to come in 2022. 

Online mortgage broker, Trussle, has calculated that this increase could add £324.48 onto the average mortgage annually. However, variable rate mortgages will be subject to steeper rises than fixed ones. 

Those on their lender’s standard variable rate, discount deals linked to that, or a base rate tracker mortgage are the only borrowers that will see their payments increase immediately. 

Borrowers on fixed terms are protected until that term comes to an end.  

But while fixed mortgage rates are not officially tied to the base rate, a rise will increase the costs that banks pay when they borrow money. 

This has seen banks move to increase the interest rates on these products, so those seeking a new fixed term today will probably need to pay more than they would have done before the base rate rise. 

Borrowers who anticipate further rises could consider remortgaging now – and perhaps even taking a five-year, rather than two-year, fix – in order to lock in today’s rates and shield themselves against future increases. 

However, if they are tied in to an existing fixed-term deal they would face penalties for leaving the deal early, which can be up to 5 per cent of the whole mortgage amount. 

Those on their lender’s standard variable rate stand to save a significant amount in interest if they remortgage to a fixed deal, although this usually means their mortgage will be less flexible and there will be more restrictions on overpaying, for example.  

Whatever the size of their deposit, most borrowers now have a wide range of mortgage products to choose from. 

At 5,394, the total number of products available in the residential mortgage sector has risen to the highest level since March 2008 according to Moneyfacts.

See our best rates round-up below for more details.  

> Quick link: Use our calculator to find mortgage rates for you 

You can check best buy tables and the best mortgage rates for your circumstances with our mortgage finder powered by London & Country – and figure out what you’ll actually be paying by using our new and improved mortgage calculator.

What are the best mortgage deals?    

Although rates are on the rise, it could still pay to switch, especially if you are on your lenders’ standard variable rate. 

These borrowers will have seen the rate rise reflected in their payments instantly, and could save hundreds of pounds a month by taking a fixed deal.

And for those coming to the end of a fixed term, switching to another fixed term with a different lender could be cheaper than sticking with their existing one. 

Mark Gordon, director of money at Compare the Market, said: ‘Languishing on a lender’s standard variable rate mortgage is likely to cost you thousands of pounds more than you need to pay.’ 

The attraction of a two-year fix may be lower rates now and extra flexibility, but that comes at the expense of needing to remortgage in two years to avoid slipping onto a more expensive standard variable rate.

A five-year fix gives the opportunity to lock into a low rate for a longer period and avoid extra fees and higher rates in a relatively short time.

Unless you have a good reason to take a two-year fixed rate, such as needing to move or expecting to have to sell your home, brokers have suggested that five-year fixed rates might be a cheaper long-term bet.

About what next for mortgage rates? 

This is our long-running mortgage rates round-up that looks at the mortgage market and what to consider when looking for a loan. 

It has been running for more than eight years and is regularly updated.

Older reader comments are left in place, so people can see what was being said in the past.

Whatever the right type of mortgage for your circumstances, shopping around and speaking to a good mortgage broker is a wise move.

Borrowers should have a quick look at the rates below. These are regularly updated by This is Money’s mortgage team. If you spot a deal you think has been pulled or should be in there, email us via editor@thisismoney.co.uk with mortgage rates in the subject field.

For a full rate check use This is Money’s mortgage finder service and best buy tables, these are supplied by our independent broker partner London & Country.  

Best fixed-rate mortgage deals

Bigger deposit mortgages

Five-year fixed rate mortgages    

Barclays has a five-year fixed-rate mortgage at 1.41 per cent with a £749 fee at 60 per cent loan-to-value

Santander has a five-year fixed-rate mortgage at 1.64 per cent with no fee at 60 per cent loan-to-value 

Two-year fixed rate mortgages      

Barclays has a two-year fixed-rate mortgage at 1.11 per cent with a £999 fee at 60 per cent loan-to-value 

Barclays has a two-year fixed-rate mortgage at 1.39 per cent with no fee at 60 per cent loan-to-value 

Mid-range deposit mortgages

Five-year fixed rate mortgages 

Barclays has a five-year fixed-rate mortgage at 1.41 per cent with a £749 fee at 75 per cent loan-to-value 

Yorkshire Building Society has a five-year fixed rate mortgage at 1.61 per cent with a £245 fee at 75 per cent loan-to-value 

Two-year fixed rate mortgages      

Santander has a two-year fixed rate mortgage at 1.29 per cent with a £999 fee at 75 per cent loan-to-value

Santander has a two-year fixed-rate mortgage at 1.49 per cent with no fee at 75 per cent loan-to-value  

Low-deposit mortgages

Five-year fixed rate mortgages

The Nottingham has a five-year fixed-rate mortgage at 2.20 per cent with a £999 fee at 90 per cent loan-to-value 

Yorkshire Building Society has a five-year fixed-rate mortgage at 2.30 per cent with a £495 fee at 90 per cent loan-to-value 

Two-year fixed rate mortgages 

HSBC has a two-year fixed rate mortgage at 1.94 per cent with no fee at 90 per cent loan-to-value

Atom Bank has a two-year fixed-rate mortgage at 1.94 per cent with no fee at 90 per cent loan-to-value 

 >> Check our our mortgage tracker to compare all of the available deals

A note on rates 

Rates can change on mortgages at short notice and sadly lenders do not always inform us when they alter them (especially if they raise rates rather than lower them). 

This can lead to occasions when the rates listed here are not available. If you ever spot this situation – or a good rate we have not listed – please email editor@thisismoney.co.uk with mortgage rates in the subject line and we will update the round-up asap.

Best tracker and discount rate mortgages 

Tracking a 0.25 per cent Base Rate may seem an odd decision when rates are likely to only go up – and you could fix for up to five years at a lower rate – however, there is one big advantage to a good lifetime tracker: flexibility.

The same usually goes for discount rate mortages, which track a certain level below the lenders’ standard variable rate.  

A fixed-rate mortgage will almost inevitably carry early repayment charges, meaning you will be limited as to how much you can overpay, or face potentially thousands of pounds in fees if you opt to leave before the initial deal period is up.

You should be able to take a good fixed mortgage with you if you move, as most are portable, but there is no guarantee your new property will be eligible or you may even have a gap between ownership.

A good lifetime tracker has no early repayment charges, you can up sticks whenever you want and that suits some people.

Make sure you stress test yourself against a sharper rise in base rate than is forecast. 

Lifetime trackers   

Melton BS has a lifetime discounted variable rate at its SVR minus 3.00 per cent for the term, currently at 1.99 per cent with fees of £240 at 75 per cent loan-to-value

First Direct has a tracker at base plus 2.09 per cent for the term, currently at 2.34 per cent, with a £490 fee at 60 to 75 per cent loan-to-value

Shorter trackers    

Barclays has a two-year tracker at base plus 0.96 per cent, currently at 1.21 per cent, with a £49 fee at 60 per cent loan-to-value

Newbury Building Society has a five-year discounted variable rate at its SVR minus 2.26 per cent, currently at 1.69 per cent, with an £850 fee at 75 per cent loan-to-value  

Watch out for discount rates, as these track a rate set by the lender rather than following the path of the Bank of England base rate.

Most lenders move their internal variable rate in line with the base rate, but they don’t have to, meaning you could see your rate rise even if the base rate stays put.

Can you get a mortgage?  

Getting a mortgage is tougher than it once was. You will need to get your finances in order and be prepared for the lengthier application process and in-depth affordability interviews getting a mortgage requires nowadays.

Lenders also apply different standards to what they will lend.

Weigh up the above, check the rates here and in our best buy mortgage tables, have a scout around what the best deals look like – and speak to a good independent broker.

There are a couple of things to look out for if you do decide to fix.

You need to check the bumper arrangement fees are worth paying – if you don’t have a big mortgage you may be better off with a slightly higher rate and lower fee.

It’s also wise to think carefully about whether you expect to move home soon. A good five-year fix should be portable, so you can take it with you.

But your new property will need to be assessed and you might need to borrow extra money, and so your lender could still say no. Getting out of a fixed rate typically requires a hefty hit to the pocket from early repayment charges.

Today’s low rates may stick around, they may even inch a little lower, but they may also be swiftly axed.

If you think you’d kick yourself if you miss out on one, then set aside some time to consider what to do.

Compare true mortgage costs

Work out mortgage costs and check what the real best deal taking into account rates and fees. You can either use one part to work out a single mortgage costs, or both to compare loans

Choosing a mortgage – the essential quick guide

1. How big a deposit do I need?

To get the full choice of deals raising a decent deposit is still vital. The benchmark figure is 25 per cent, if you have this then you’ll be getting close to the best rates, although for an absolute cheapest deal you’re still likely to need 40 per cent.

However, a selection of better deals for smaller deposits is also now available.

2. Should I take a fixed rate?  

Most borrowers consider the security of a fixed rate as worthwhile, whereas variable rate deals can be cheaper but leave you exposed to potential rate rises.

If you decide to take a fix you need to carefully consider how long for. 

Two-year deals are cheap but only offer very short-term security and incur extra costs when you remortgage. 

Five-year deals lock you in for longer and come with slightly higher rates but better security and no need to remortgage in a relatively short space of time.

3. Should I take a tracker rate?

Tracker rates are essentially a gamble. What looks like a bargain rate now, could soon get very expensive when interest rates rise.

Anyone considering a tracker needs to make sure they are not just storing up a problem for the future. If the tracker comes with an early redemption penalty that would make it expensive to jump ship, then make sure your finances could take a rise of at least 2 per cent to 3 per cent in interest rates.

For that reason we at This is Money like tracker deals that fit into one of these three categories: no early redemption penalties, a cap to how high the rate will go, or that let you jump ship for a fixed rate if rates rise.

4. Should I get off a standard variable rate?

Standard variable rates are what borrowers slip onto by default when they finish a fixed or tracker deal period.

They can typically be changed by lenders at any time – without the Bank of England moving rates, they may also rise or fall by more than any move in base rate.

A number of mortgage borrowers have fallen victim to lenders hiking their standard variable rates, despite the base rate remaining stable. 

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