You can still get a mortgage rate of less than 1 per cent despite lenders raising costs after last week’s budget.
Banks and building societies have withdrawn deals and put up the rates on other mortgages over the past two weeks in a sign that the decade of plummeting rates homeowners have enjoyed is coming to an end.
But don’t panic, because, the lowest rates are still better than they were six months ago and sub-1 per cent deals have not disappeared completely.
Borrowers with a 40 per cent deposit or equity can take out a two-year fix at 0.88 per cent from Cumberland Building Society or 0.89 per cent from the Progressive Building Society.
Lloyds Bank and Ulster Bank, part of NatWest, have deals at 0.91 and 0.94 per cent, according to the data company Moneyfacts.
Advertisement
Six months ago, the best two-year fixed rate was 0.99 per cent.
There is only one sub-1 per cent deal for those who want to fix for five years, from Ulster Bank at 0.99 per cent for borrowers with 60 per cent loan-to-value (LTV). Six months ago, the best five-year fixed rate was 1.19 per cent.
On Wednesday Nationwide withdrew all of its tracker mortgages which follow the base rate and increased rates on some first-time buyer and remortgage deals by up to 0.35 percentage points.
HSBC increased rates on 28 of its mortgage deals, NatWest announced rate hikes on several products by up to 0.15 percentage points, and TSB by 0.3 points.
The price hikes follow from last week, when NatWest, Halifax, HSBC, Barclays and Nationwide all increased rates. A two-year fixed mortgage from Barclays at 60 per cent loan to value with a £999 fee now costs 1.26 per cent, up from 0.91 per cent, and rate increases at Nationwide mean the building society no longer has any deals below 1 per cent.
Advertisement
Banks had been increasing rates in anticipation of a rate rise from the Bank of England on Thursday, but the central bank surprised the markets by keeping its base rate at a historic low of 0.1 per cent.
The Bank of England said that it would be necessary to increase the bank rate in order to return inflation to its 2 per cent target in the coming months, however, so it is anticipated that rates will still rise.
In light of the central bank’s meeting, Nationwide said it would bring back tracker mortgages next week, as the withdrawal was a “temporary move” while it reviewed the range ahead of the bank rate decision.
