The average rate for a two-year fixed mortgage stands at 5.41%, lower than last week’s 5.54%, while five-year fixed deals average 5.54%, unchanged from the previous week, according to data from Uswitch.
This week, HSBC launched a 3.98% deal but not everyone will be able to take advantage of it. Customers looking to take advantage of the five-year fix will need an annual income of £100,000 or over and be a Premier customer with the bank.
Aaron Strutt, of mortgage broker Trinity Financial, said: “Just when we thought it was all over for sub-4% fixes for a while, HSBC has topped the best buy table with a 3.98% five-year fix.
“While the rate is really good, it is not going to be as widely available to borrowers because of the high minimum income qualification requirement.
“The good news is that HSBC’s move shows the lenders can still offer really cheap mortgages despite the ongoing uncertainty driven by inflation and mixed messaging about the number of base rate cuts we will get this year. There is a selection of lenders offering five-year fixes around 4.1 per cent.”
TSB has launched a deal that will allow buyers to purchase new build properties with a deposit of just 5%.
The society’s lowest mortgage rate now stands at 3.99%, available to existing customers switching to a new deal and new customers looking to remortgage.
The recent moves come as data showed a sharp increase in the number of people taking out mortgages in later life as more people continue to work after pension age.
There were 35,840 new loans to people over the age of 55 in the last three months of 2024, an increase of 28.2% since the same period the previous year, according to figures from UK Finance.
Also, the Financial Conduct Authority (FCA) is moving forward with its "growth proposals", including changes to mortgage affordability. The government and FCA are considering relaxing mortgage affordability rules to boost first-time buyer lending, including reforms to loan-to-income caps and financial stress-testing rules that limit how much first-time buyers can borrow.
HSBC (HSBA.L) has a 4.07% rate for a five-year deal. This is lower than the 4.19% from the previous week. For those who have a Premier Standard account with the lender, this rate comes in at 3.98%.
The 3.98% five-year fix comes with a £999 product fee. A £200,000 mortgage would cost someone £1,053 a month, based on a 25-year repayment term. It is only available to customers who are HSBC Premier banking customers.
To qualify as a premier customer borrowers will need to have an individual annual income of at least £100,000 and pay it into an HSBC Premier Bank Account, or have savings or investments of at least £100,000 with HSBC in the UK.
Looking at the two-year options, the lowest rate stands at 4.19% with a £999 fee, again lower than the previous 4.30%. For premier clients this comes down to 4.16%.
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 5.57% or 5.25% 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 (NWG.L) has a five-year deal coming in at 4.12% with a £1,495 fee, which is unchanged from the previous week.
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For a two-year fix, the cheapest deal comes in at 4.15%, also unchanged from last week's deal. In both cases, you'll need at least a 40% deposit to qualify for the rates.
At Santander (BNC.L), a five-year fix now come in at 4.06%, with a £999 fee, assuming you have a 40% deposit. The bank dropped its 3.99% deal amid high demand.
For a two-year deal, customers can still secure an under-4% offer, 3.99% with the same £999 fee, which is unchanged from the previous week.
A five-year fix at Barclays (BARC.L) comes in at 4.09%, which is untouched from the previous week. For "premier" clients this rate drops to 3.99%.
When it comes to two-year mortgage deals, the lowest you can get is 4.22%, also unchanged from last week’s deal.
Barclays has also 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.
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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.
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 unchanged from last week.
Nationwide offers a two-year fixed rate for home purchase at 4.34% with a £999 fee — also for borrowers with a 40% deposit. This is lower than the 4.46% from the previous week.
From Friday, first-time buyers will benefit from cuts of up to 0.25% across selected fixed-rate deals, including a five-year fix at 90% LTV with a £999 fee at 4.74%, down 0.25%.
Carlo Pileggi, senior manager of mortgages at Nationwide, said: “Our third set of rate cuts in three weeks should come as great news for borrowers. We remain as committed as ever to supporting all segments of the market, including those buying their first home or moving to their next, and with our switcher and remortgage rates starting from 3.99%, we aim to be front of mind for those looking for a new deal too.”
Halifax, the UK’s biggest mortgage lender, offers a five-year rate for 4.17% (also 60% LTV), which is below last week’s 4.20%.
The lender, owned by Lloyds (LLOY.L), has a two-year fixed rate deal coming in at 4.24%, with a £999 fee for first-time buyers, which is also lower than the previous 4.35%.
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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.
With sub-4% mortgages making their way back into the market, prospective homeowners have reasons to smile when it comes to finding a good deal.
HSBC now has the cheapest deal in the market. However, the 3.98% offer requires a 40% deposit and premier client conditions so it is only for a selected few. Santander, at 4.06% is probably a better bet for most prospective homeowners, but you will need a hefty amount of cash upfront to secure the deal.
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.
Read more: UK house prices rise at fastest pace in nearly two years
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 base rate has been passed on by banks and building societies.
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.
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