By clicking a retailer link you consent to third-party cookies that track your onward journey. This enables W? to receive an affiliate commission if you make a purchase, which supports our mission to be the UK's consumer champion.
A host of mortgage products are now set at rates below 5% as lenders cut prices following the Bank of England's decision to freeze the base rate last week.
The reductions are positive news for the 430,000 homeowners who still need to remortgage this year and for first-time buyers trying to get on the housing ladder.
Here, Which? looks at which lenders are offering the lowest rates and what the future could hold for the cost of mortgages.
As of Friday 29 September, there are 80 fixed-rate deals with sub-5% interest.
The majority are five-year products (58), followed by 10-year terms (21) and one seven-year product.
There are no two-year fixes below 5% - they are still quite a way from falling behind that threshold as the lowest rate is 5.23% from Danske Bank.
Nine lenders are currently offering rates below 5%.
These are the Bank of Ireland, Danske Bank, HSBC, Nationwide, NatWest, Royal Bank of Scotland, Santander, Virgin Money and Yorkshire Building Society.
The leading rate comes from Virgin Money - set at 4.82% with an additional £1,295 fee. It is available for first-time buyers and home movers with either 60% or 75% loan-to-value LTV.
The top remortgaging rate is 4.92% with Yorkshire Building Society, which comes with a £1,495 fee.
Lloyds Bank and Nationwide are the two providers currently offering 10-year fixes below 5%.
The 4.83% rate from Lloyds, which is available to first-time buyers and home movers borrowing at 60% LTV, is the market-leading figure. It comes with a £999 fee. Remortgagers at 60% LTV can get a rate of 4.91%.
For those with a smaller deposit meaning they can borrow at 75% LTV, the best rate is again from Lloyds. It's set at 4.88% with a £999 fee.
Nationwide offers a 4.94% rate, with a £999 fee. It's available for first-time buyers, home movers and remortgagers with 60% or 75% LTV.
Loan-to-value (LTV) is the ratio of mortgage to property value, expressed as a percentage.
For example, if you're buying a £200,000 property with a £20,000 (10%) deposit, you'll need a 90% LTV mortgage.
You can find out what LTV you need by inputting your deposit (or equity if you're remortgaging) and property value into our LTV calculator.
Mortgage rates tend to be lower for those with lower LTV amounts. For example, the leading five-year fix at 60% LTV is 4.82%, compared with 5.28% for 90% LTV.
Rate reductions in the past week have caused the average five-year fix to dip below 6% for the first time since early July.
But when looking for a mortgage deal, you shouldn't settle for the average. The table shows how much those with 75% LTV can save by sourcing the leading rate compared with the average.
| Deal | Rate | Monthly payment | Total paid back after five years |
|---|---|---|---|
| Leading five-year fix at 75% LTV | 4.82% | £1,148 | £68,880 |
| Average five-year fix at 75% LTV | 5.74% | £1,257 | £75,420 |
Table notes: Calculations based on £200,000 mortgage with 25 years remaining. Does not account for additional fees. Rates correct as of 29 September
When searching for a mortgage, consider taking advice from a whole-of-market broker as they are likely to have access to a wider range of deals and can reduce the admin by applying on your behalf.
Find the right mortgage using the fee-free service provided by L&C Mortgages
Compare mortgagesIf you click on the link and complete a mortgage with L&C Mortgages, L&C is paid a commission by the lender and will share part of this fee with Which? Ltd helping fund our not-for-profit mission. We do not allow this relationship to affect our editorial independence. Your home or property may be repossessed if you do not keep up repayments on your mortgage.
Borrowers breathed a sigh of relief following the base rate freeze last week, and there are hopes we've now reached a peak.
Nothing, however, is guaranteed and the Bank of England has warned that if inflation doesn't continue to fall, further base rate hikes could follow.
But experts do believe we could now have 'stability' in the mortgage market, along with some small price cuts as lenders compete to offer the best rate.
Simon Gammon, managing partner at Knight Frank Finance said: 'We do expect more, marginal cuts during the weeks ahead, but that will soon reach a plateau.
'The best fixed-rate deals already start with a four, and we expect rates to settle in that range until the Bank of England opts to cut the base rate, which is unlikely before next spring at the very earliest.'
Matt Smith, mortgage expert at Rightmove, said: 'As we approach the final quarter of this year, we are likely to see continued stability in the mortgage market persist with rates continuing to gradually drop and more lenders likely to offer sub-5% deals.'
If you're looking to get a mortgage and don't know where to begin, we're here to help.
Our comprehensive mortgage guides provide advice on everything from saving for a deposit to finding the best deal and applying for a mortgage.
If you're already a homeowner, you can find advice on switching deals in our guides on remortgaging to get a cheaper deal or to release equity.
Which? Limited is registered in England and Wales to 2 Marylebone Road, London NW1 4DF, company number 00677665 and is an Introducer Appointed Representative (FRN 610689) of the following:1. Inspop.com Ltd for the introduction of non-investment motor, home, travel and pet insurance, who are authorised and regulated by the Financial Conduct Authority (FCA) to provide advice and arrange non-investment motor, home, travel and pet insurance products (FRN310635). Inspop.com Ltd is authorised and regulated by the Financial Conduct Authority (FCA) to provide advice and arrange non-investment motor, home, travel and pet insurance products (FRN310635) and is registered in England and Wales to Greyfriars House, Greyfriars Road, Cardiff, South Wales, CF10 3AL, company number 03857130. Confused.com is a trading name of Inspop.com Ltd. 2. LifeSearch Partners Limited (FRN656479), for the introduction of Pure Protection Contracts and Private Health Insurance, who are authorised and regulated by the FCA to provide advice and arrange Pure Protection Contracts and Private Health Insurance Contracts. LifeSearch Partners Ltd is registered in England and Wales to 3000a Parkway, Whiteley, Hampshire, PO15 7FX, company number 03412386.3. HUB Financial Solutions, for the introduction of equity release advice, who are authorised and regulated by the Financial Conduct Authority (‘FCA’) to provide advice and guidance on financial products for those who have retired or are approaching retirement (FCA Firm Reference Number: 455713). HUB Financial Solutions is registered in England and Wales to Enterprise House, Bancroft Road, Reigate, Surrey RH12 7RP, company number 05125701.4. Alan Boswell Insurance Brokers Ltd (FRN 301), for the introduction of non-investment landlord insurances, who are authorised and regulated by the Financial Conduct Authority to provide advice and arrange insurance contracts. Alan Boswell insurance brokers Ltd is registered in England at Prospect House, Rouen Rd, Norwich NR1 1RE, company number 02591252.Other financial services:Mortgage service provided by London & Country Mortgages (L&C), Unit 26 (2.06), Newark Works, 2 Foundry Lane, Bath BA2 3GZ. London & Country are authorised and regulated by the Financial Conduct Authority (registered number: 143002). The FCA does not regulate most Buy to Let mortgages. Your home or property may be repossessed if you do not keep up repayments on your mortgage.We do not make, nor do we seek to make, any recommendations or personalised advice on financial products or services that are regulated by the FCA, as we’re not regulated or authorised by the FCA to advise you in this way. In some cases, however, we have included links to regulated brands or providers with whom we have a commercial relationship and, if you choose to, you can buy a product from our commercial partners. If you go ahead and buy a product using our link, we will receive a commission to help fund our not-for-profit mission and our campaigns work as a champion for the UK consumer. Please note that a link alone does not constitute an endorsement by Which?.
