Best UK mortgage deals of the week

Pedro Goncalves

Mortgage rates below 4% are back on sale in the UK as Nationwide is now offering a 3.99% deal for new customers looking to borrow up to 60% of the property's value. Experts anticipate other lenders will follow suit to stay competitive, meaning it could be a "summer of savings" for homebuyers.

Overall, the average rate on a two-year fixed deal this week stood at 5.94%, a drop from last week's 6.09%, while rates for a five-year deal came in at 5.32%, also lower than previous 5.45%, according to figures from Uswitch.

Nicholas Mendes​, a mortgage technical manager at the broker John Charcol, said: “Nationwide is the first lender to finally breach the 4% benchmark following recent weeks of downward repricing. This is fantastic news for borrowers and signifies a significant change in the mortgage landscape after recent months of increased rates.”

He added that the 3.99% rate was for house purchases only, and those looking to remortgage would need to wait a bit longer.

The Bank of England (BoE) has left UK interest rates on hold at a 16-year high of 5.25% for a seventh consecutive time, but markets are hoping for an August cut, which would see lender put better deals on the market.

“We will likely see the likes of HSBC look to reprice again to ensure they remain ahead of the pack,” Mendes added.

However, Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: "Mortgage rates could fall further, but it is difficult to tell how quickly and by what margins",

She added: “Those waiting for the Bank of England to cut base rate may be crossing their fingers for August, but this has split opinions among economists who are now pointing towards September at the earliest due to stubborn service inflation.”

The last time a five-year fixed-rate deal priced at below 4% was available was at the end of February.

Aaron Strutt, director at broker Trinity Financial, said lenders were offering lower rates to buyers because they are “still trying to stimulate the property market” and they “do not need to work quite so hard to get remortgage business”.

Read more: How renting might be a better investment than buying

Meanwhile, young homebuyers are being forced to gamble with their retirement prospects by taking on ultra-long mortgages. In the last three years, researchers have noted a surge in mortgage terms that see homeowners locked into mortgages running beyond the state pension age. This is particularly rife among those under 30, data from the BoE highlighted.

However, slowing inflation is likely to be well-received by homeowners and buyers pinning their hopes on a summer interest rate cut.

Inflation has fallen back to the BoE’s 2% target for the first time in nearly three years and it stayed there in June.

Borrowers have long said goodbye to HSBC’s (HSBA.L) 3.99% for a five-year deal. The cheapest deal at the lender’s table is now 4.14% for five years.

Looking at the two-year options, the lowest rate comes in at 4.54% with a £999 fee, lower than last week's deal.

Both cases assume a 60% loan-to-value (LTV) mortgage, meaning buyers need to have at least 40% for a deposit.

The lender 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 5.89% or 5.35% 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.

Read more: UK property asking prices dip as buyers hope for interest rate cut

The best rates prospective borrowers can get at NatWest (NWG.L) is an online-only deal offering 4.08% for a five-year deal with a £1,495 fee, assuming a 60% LTV. After five years, however, the rate almost doubles. Last week the same deal was pricier, at 4.24%.

Natwest offers 414% for green mortgages — this product is available for properties with an energy performance certificate (EPC) rating of A or B, where the fee drops to £995.

For a two-year fix, the cheapest a customer can get is 4.51% online, with a product fee of £1,495. Cheaper than last week’s 4.67%.

At Santander (BNC.L) a five-year fix comes in at 4.20%, assuming you have a 40% deposit. Unchanged from last week.

For a two-year deal, the cheapest customers can get is 4.58% also unchanged from last week, when the lender introduced a raft of cuts to its deals.

Barclays (BARC.L) used to have the cheapest five-year deal for prospective homebuyers with a 40% deposit (60% LTV) that came in at 4.17%, with an £899 fee. No more — the lender has hiked the rate for that deal to 4.09%, unchanged from the previous week.

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When it comes to two-year mortgage deals, the lowest you can get is 4.52%, also unchanged.

Nationwide (NBS.L) now offers a five-year fix for purchase at a market-leading 3.99% – a 0.19 percentage point cut on the previous deal at 4.18%.

The deal comes with a £1,499 fee and requires a 40% deposit. It also only applies to loans of £300,000 or more.

Nationwide offers a two-year fixed rate for home purchase at 4.65% with a £999 fee – also for borrowers with a 40% deposit.

For first-time buyers there are reductions of up to 0.24% across two, three, five-year fixed rate products up to 95% LTV, including:

  • Five-year fixed rate at 85% LTV with a £999 fee is 4.55% (reduced by 0.24%)

  • Two-year fixed rate at 85% LTV with a £999 fee is 4.95% (reduced by 0.19%)

  • Five-year fixed rate at 60% LTV with a £1,4992 fee is 4.34% (reduced by 0.20%)

  • Five-year fixed rate at 60% LTV with a £999 fee is 4.39% (reduced by 0.20%)

Halifax, the UK’s biggest mortgage lender, has cut some of its deals as the market anticipates a rate cut next month. offers a two-year fixed rate of 4.46% with a £999 fee for first-time buyers.

The lender, owned by Lloyds (LLOY.L) has a five-year rate going for 4.06% (also 60% LTV), lower than last week’s 4.18%.

It also offers a 10-year deal with a mortgage rate of 4.93%.

As only one big lender is offering under 4% mortgage rates, it makes it easy to see that Nationwide currently has the cheapest deal on the market.

However, its 3.99% deal requires a 40% deposit, so you will need a hefty amount of cash upfront to secure the deal. Halifax is close, with a 4.06% deal for a five-year fix.

Aaron Strutt of brokers Trinity Financial said: “More lenders are lowering their rates at the moment to undercut their competitors. This is good news for borrowers planning to get on the property ladder soon or remortgaging homeowners keen to minimise the payment shock.”

Read more: Which first-time home buyer scheme is right for me?

Given the average UK house price sits at £261,962, a 40% deposit equates to about £105,000.

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 4.99%, 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.

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 falling to target, traders are now pricing in just one or two rate cuts, compared to expectations of five cuts at the start of 2024.

If the BoE makes any cuts this year, mortgage rates will come down, but not as much as expected for 2024. Markets are pricing one cut in August and maybe another later in the year.

Nicholas Mendes, head of marketing and mortgage technical manager at John Charcol, said: “It’s important to note that until an official bank rate cut happens, lenders will exhibit mixed attitudes. Those with smaller pipelines may be more proactive in implementing reductions.”

About 1.6 million existing borrowers have relatively cheap fixed-rate deals expiring this year.

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