More than half a million UK homeowners are set to see their mortgage bills increase by an average of £280 a year following recent volatility in the bond markets, new analysis revealed.
The average rate for a two-year fixed mortgage stands at 5.29%, a slight decrease from the previous 5.31%, while five-year fixed deals average 5.24%, same as before, according to data from Uswitch.
According to calculations from the Resolution Foundation, around 570,000 households coming off five-year fixed-rate deals in 2025 will face an average annual cost increase of £2,700. This represents a £280 rise compared to the market conditions anticipated at the time of last year's budget.
Meanwhile, Barclays (BARC.L) is now offering its Mortgage Boost to new and existing customers, allowing home buyers to borrow more without a larger deposit. Figures from the lender showed that the average age of first-time buyers in the UK rose to nearly 34 in 2024, up from just over 31 only two years earlier, as people increasingly have to delay purchasing their first home.
This week, major UK mortgage lenders NatWest (NWG.L), Nationwide (NBS.L), and Halifax all raised their mortgage rates, while the rest of the country’s biggest banks chose to keep their rates unchanged. Notably, no lender opted to lower rates.
HSBC
HSBC (HSBA.L) has a 4.19% rate for a five-year deal. This is unchanged from the previous week. For those who have a Premier Standard account with the lender, this rate comes in at 4.16%.
Looking at the two-year options, the lowest rate stands at 4.30% with a £999 fee, again unchanged.
Both cases assume a 60% loan-to-value (LTV) mortgage, meaning buyers need to have at least 40% for a deposit.
HSBC offers 95% LTV deals, meaning you only need to save for a 5% deposit. The rates are much higher, however, with a two-year fix coming in at 5.69% or 5.29% for a five-year fix.
This is because the rate someone can get will be determined by their financial situation and the size of their deposit. The larger the deposit, the lower the LTV, allowing buyers to access better deals because lenders consider them less risky.
NatWest
NatWest (NWG.L) has dropped its 4.07% rate for a five-year deal with a £1,495 fee, which was the cheapest on the market. That same deal now comes in at 4.23%.
For a two-year fix, the cheapest deal comes in at 4.33%, also higher than last week’s 4.27%. In both cases, you'll need at least a 40% deposit to qualify for the rates.
Santander
At Santander (BNC.L), a five-year fix comes in at 4.18% with a £999 fee, assuming you have a 40% deposit — unchanged from the previous week.
For a two-year deal, the cheapest customers can get is 4.33% with the same £999 fee, which is also unchanged.
Barclays
A five-year fix at Barclays (BARC.L) comes in at 4.31%, which is unchanged from the previous week.
When it comes to two-year mortgage deals, the lowest you can get is 4.43%, also untouched from the previous week.
Barclays has launched a new mortgage proposition designed to help new and existing customers access larger loans when purchasing a home. The initiative, known as Mortgage Boost, enables family members or friends to effectively "boost" the amount that can be borrowed towards a property, without needing to lend or gift money directly or provide a larger deposit.
Under the new scheme, a borrower’s eligibility for a mortgage can increase significantly by including a family member or friend on the application. For example, an individual with a £37,500 annual income and a £30,000 deposit might traditionally be able to borrow up to £168,375, enabling them to purchase a home priced at around £198,375.
However, with Mortgage Boost, if a second person — such as a parent — joins the application, the total borrowing potential can rise substantially. In this case, if the second applicant also earns £37,500 a year, the combined income could push the borrowing limit to £270,000, enabling the buyer to afford a home worth up to £300,000.
Sian McIntyre, managing director of life moments at Barclays, said: “Buying a first home is a hugely important step in life and one that has unfortunately become tougher for many in recent years. We know people feel like they have to make huge compromises in order to save for a large deposit, and that family may want to help but cannot afford to.
“Mortgage Boost can help answer these challenges, supporting people to buy their first home earlier and without giving up on their other dreams.”
Nationwide
Nationwide (NBS.L) is offering a five-year fix at 4.34%, which comes with a £999 fee and requires a 40% deposit. This is higher than last week’s 4.19%
Nationwide offers a two-year fixed rate for home purchase at 4.46% with a £999 fee — also for borrowers with a 40% deposit. Again, higher than the previous 4.34%.
Halifax
Halifax, the UK’s biggest mortgage lender, offers a five-year rate for 4.29% (also 60% LTV), which is more than last week’s 4.12%.
The lender, owned by Lloyds (LLOY.L) has a two-year fixed rate deal coming in at 4.43%, with a £999 fee for first-time buyers, which is also higher than the previous 4.23%.
It also offers a 10-year deal with a mortgage rate of 4.78%.
The lender has announced the launch of a new 1.5-year fixed-rate remortgage product in response to growing demand among borrowers for shorter-term deals.
Shorter-term fixes offer certainty over monthly payments while also allowing households to switch to a new deal sooner to capitalise on lower rates.
Cheapest mortgage deal on the market
With mortgages below 4% no longer on the market, prospective homeowners are back to limited choices when it comes to finding a good deal.
Santander has the cheapest deal on the market. However, its 4.18% offer requires a 40% deposit, so you will need a hefty amount of cash upfront to secure the deal. HSBC is close behind, offering a 4.19% deal for a five-year fix.
Given the average UK house price sits at £366,189, a 40% deposit equates to about £147,000.
A growing number of homeowners in the UK are opting for 35-year or longer mortgage terms, with a significant rise in older borrowers stretching their repayment periods well into their 70s.
Lender April Mortgages is offering buyers the chance to borrow up to six times their income on loans fixed for five to 15 years, from a deposit of 5%. Both those buying alone and those buying with others can apply for the mortgage.
The company, which is part of an independent Dutch asset manager DMFCO, has interest rates starting at 5.20%, with an application fee of £195.
Skipton Building Society has also said it would allow first-time buyers to borrow up to 5.5 times their income, in an effort to support more borrowers on to the housing ladder.
Leeds Building Society is increasing the maximum amount that first-time buyers can potentially borrow as a multiple of their earnings, with the launch of a new mortgage range. Aspiring homeowners with a minimum household income of £40,000 may now be able to borrow up to 5.5 times their earnings.
Mortgage holders and borrowers have faced record-high repayments in recent years, as the Bank of England's increased base rate has been passed on by banks and building societies. Until now, the general expectation has been that interest rates have reached their peak.
With 1.8 million fixed mortgage deals set to end in 2025, according to UK Finance, many homeowners will be hoping the Bank of England acts quickly to cut rates more aggressively. At the same time, savers will likely be rooting for rates to remain at or near their current levels.
