Most major UK lenders maintained mortgage rates this week as the market awaits the Bank of England’s (BoE) upcoming interest rate announcement scheduled for June 19.
According to Uswitch data, the average two-year fixed mortgage rate remains unchanged at 4.89%, while five-year fixed rates inched slightly higher to 5.14% from 5.09% last week.
The BoE’s base rate, which directly influences mortgage pricing, was cut from 4.5% to 4.25% in early May—marking the fourth reduction since rates peaked at 5.25% last year. The central bank’s focus remains balancing efforts to curb inflation, which rose to 3.5% year-on-year in April, with sustaining economic growth and employment stability.
Recent economic data revealed the UK economy contracted 0.3% in April, exceeding expectations for a 0.1% decline. Capital Economics’ chief UK economist Paul Dales noted that while this data “won’t prompt the Bank of England to cut interest rates next Thursday,” it increases the likelihood of another reduction in August.
Mortgage market experts emphasize the importance of acting swiftly amid fluctuating rates. Sarah Coles, head of personal finance at Hargreaves Lansdown, commented, “If inflation remains steady and rates are held, expectations for two further cuts this year could materialize, providing opportunities for borrowers.”
Lender Highlights:
NatWest cut its five-year fixed mortgage rate slightly to 3.95% (from 3.99%), and two-year fixes to 3.92% (from 3.94%), requiring a 40% deposit.
HSBC kept its five-year fixed rate steady at 4.01% (3.98% for Premier Standard account holders), and two-year fixes at 3.96% for Premier Standard accounts, based on 60% loan-to-value (LTV). Higher LTV deals, requiring only a 5% deposit, carry significantly higher rates.
Santander maintained a five-year fix at 4.08% for first-time buyers and a two-year fix at 4.01%, both with a £999 fee and 40% deposit.
Barclays offered a five-year fix at 3.99% (3.98% for Premier clients) and two-year fixes at 3.97%. The bank also introduced “Mortgage Boost,” a scheme allowing family or friends to boost borrowing potential without direct lending or gifts.
Nationwide holds a five-year fixed rate at 4.24% and a two-year fixed rate at 4.04%, both with £999 fees and 40% deposits. It has lowered the minimum income for its “Helping Hand” mortgage scheme to £35,000, increasing eligibility.
Halifax kept its five-year fixed rate at 4.0% and two-year fixes at 4.03%, and introduced a new 1.5-year fixed remortgage product aimed at borrowers seeking shorter-term certainty.
Market Trends:
NatWest’s 3.95% five-year fixed rate remains the most affordable, but requires a substantial 40% deposit—approximately £120,000 based on the UK average house price of £296,648. Many borrowers are extending mortgage terms beyond 35 years, with older homeowners spreading repayments well into retirement.
Innovative lenders like April Mortgages and Skipton Building Society are expanding borrowing limits, allowing mortgages up to seven times income or 5.5 times income respectively, to support homebuyers amid rising costs.
As 1.3 million fixed mortgage deals expire in 2025, many homeowners are hoping the Bank of England accelerates rate cuts to ease repayment burdens, while savers await stable or higher interest rates.
The mortgage market remains finely balanced as borrowers navigate a landscape of rising prices, evolving lender offers, and an uncertain economic outlook.
