Under 4%-deals hitting the market were expected to spark another mortgage war among big lenders but mortgage brokers warn that more rises are on the way.
The average rate on a two-year fixed deal came in at 5.09%, unchanged from than last week, while average rates for a five-year deal came in at 4.98%, higher than the previous 4.74%, according to figures from Uswitch.
The Bank of England has kept interest rates at 5% but investors predict two cuts will happen before the end of the year, with the first expected to take place in November.
Alice Haine, personal finance expert at Bestinvest, said: ““While the latest inflation data appears positive for consumers, almost three years of rapid prices rises have left their mark on household budgets and many are still trying to balance the books as their finances slowly recover from the high borrowing and living costs seen at the height of the cost-of-living squeeze.
"They will now be looking to the BoE for action on rates, as a second quarter-point reduction in November would help to ease borrowing costs further for those with mortgages and debts."
However, mixed signals from the BoE and uncertainty around this month’s budget are sending “confusing” messages about where interest rates will go in future.
Santander and NatWest are the biggest banks to increase their lowest mortgage rates following a surprise rise in the cost of funding.
Orchard Financial Advisers managing director Ben Perks said: "More rises are on the way from big lenders.”
Despite the gloomy scenario, two-year fixed mortgages are still available from around 3.85% and five-year fixes from around 3.80%
Aaron Strutt, product director at Trinity Financial, said: "A range of banks and building societies still offer sub-4% fixed rates for property purchases and remortgages. The lenders are doing more to tempt borrowers to switch lenders rather than stick with their existing mortgage providers.
"We are helping lots of first-time buyers secure mortgages, and many want to complete their purchase well before the stamp duty increase."
Mortgage lenders' attempts to lure in first-time buyers have stepped up with the UK's biggest building society allowing some to borrow more.
Nationwide has said that from now on, new borrowers could request a mortgage up to six times their income with a 5% deposit. But it would only be available for those taking out a five- or 10-year fixed-rate deal.
HSBC mortgage rates
HSBC (HSBA.L) has a 3.82% rate for a five-year deal. This is unchanged from last week, and for those that have a Premier Standard account with the lender this rate has come down to 3.79%.
Looking at the two-year options, the lowest rate comes in at 4.14% with a ￡999 fee, which is also 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 5.75% or 5.19% 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.
“The significant aspect of HSBC’s offer is the combination of a low rate and a manageable fee, making this deal highly attractive,” said Nick Mendes of John Charcol brokers.
NatWest mortgage rates
NatWest (NWG.L) is offering 3.74% for a five-year deal with a ￡1,495 fee, after removing its market-leading 3.71% offer.
For a two-year fix, the cheapest deal comes in at 4.02%, unchanged from the previous week. In both cases, you'll need at least a 40% deposit to qualify for the rates.
Santander mortgage rates
At Santander (BNC.L) a five-year fix comes in at 3.75% with a ￡999 fee, assuming you have a 40% deposit — which is higher than last week's 3.68%.
For a two-year deal, the cheapest customers can get is 3.92% with the same ￡999 fee, which is also lower than the previous 3.84%. This is currently one of two sub-4% deal available on the market for a two-year fix.
Barclays mortgage rates
Barclays (BARC.L) has dropped its market leading 3.71% five-year deal for prospective homebuyers with a 40% deposit (60% LTV). The same deal now comes in at 3.76%.
When it comes to two-year mortgage deals, the lowest you can get is 3.90%, lower than last week’s 3.99%.
This is now the cheapest two-year fix rate across the big lenders, taking the crown from NatWest.
Nationwide (NBS.L) is offering a five-year fix at 3.99%, which comes with a ￡999 fee and requires a 40% deposit.
Nationwide offers a two-year fixed rate for home purchase at 4.09% with a ￡999 fee — also for borrowers with a 40% deposit. Both unchanged from the previous week
Halifax mortgage rates
Halifax, the UK’s biggest mortgage lender, offers a five-year rate for 3.77% (also 60% LTV), which is lower than the previous week's 3.78%.
The lender, owned by Lloyds (LLOY.L) has a two-year fixed rate deal coming in at 4.03%, with a ￡999 fee for first-time buyers, which the same as the previous week
It also offers a 10-year deal with a mortgage rate of 4.58%.
Cheapest mortgage deal on the market
With mortgages below 4% back on the market, prospective homeowners are starting to have some choice when it comes to finding a good deal.
NatWest currently has the cheapest deal on the market. However, its 3.74% offer requires a 40% deposit, so you will need a hefty amount of cash upfront to secure the deal. Santander is close behind, with a 3.75% deal for a five-year fix.
Given the average UK house price sits at ￡292,505, a 40% deposit equates to about ￡117,000.
Borrowers would need to spread their home loans over more than 70 years to afford the same mortgages on offer just two years ago, banks have said.
There is also a new mortgage product promising to help first-time buyers get on the property ladder with just a ￡5,000 deposit. Yorkshire Building Society is offering a deal that enables first-time buyers across England, Scotland and Wales with a ￡5,000 deposit to purchase a property valued at up to ￡500,000.
This means first-time buyers could get on the ladder with as little as a 1% deposit.
Also, lender April Mortgages is now 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 will allow first-time buyers to borrow up to five-and-a-half times their income, in an effort to support more borrowers on to the housing ladder.
Will mortgage rates go down in 2024?
Mortgage holders and debt borrowers have been forced to pay record-high repayments in recent years due to the UK's hiked base rate being passed onto customers by banks and building societies. Until now, the consensus was that interest rates have peaked and that 2024 will see rate cuts as inflation eases.
However, even with inflation close to the BoE's target of 2%, traders are now pricing in just two more rate cuts, compared to expectations of five cuts at the start of 2024.
Matt Smith, Rightmove’s mortgage expert, said: “While those looking to take out a mortgage soon shouldn’t expect to see drastically lower mortgage rates, we would expect the downward trend we’ve started to see continue."
He said that once there are "further reductions to the base rate, people should really start to see the impact. However, it’s important to keep in mind that mortgage rates are widely expected to eventually settle at higher levels than previously, with the market view that the base rate may eventually fall to about 3.25%."
About 1.6 million existing borrowers have relatively cheap fixed-rate deals expiring this year.
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