Over the last few months, the UK has seen a sharp increase in average mortgage rates due to increasing economic pressures. This coupled with the general cost of living crisis has meant that many people who were once enjoying low mortgage costs and relatively manageable bills and utilities are now starting to feel the strain. Over the next few years, hundreds of thousands of people will be coming off of low fixed rate mortgage options and will be forced to take out much higher interest products. According to July 2023 data from Uswitch, a leading online price comparison website, average UK mortgage rates have seen increases across different loan-to-value (LTV) and fixed-rate terms.
Average UK Mortgage Rates July 2023
For two-year fixed-rate mortgages with a 75% loan-to-value, rates rose from 6.59% on the 11th of July 2023 to 6.70% on the 17th of July 2023, an increase of 0.11% in a week. Similarly, two-year fixed rate mortgages with a 90% LTV saw an increase from 6.49% to 6.64%, reflecting a rise of 0.15% in a week too. On the other hand, five-year fixed-rate mortgages with a 75% LTV remained stable at 5.79%.
Analysing the average mortgage rates across the big six lenders, which include Nationwide, Santander, HSBC, Halifax, Barclays Bank, NatWest, and Lloyds Bank, Uswitch has recorded similar trends. Two-year fixed rate mortgages with a 75% LTV rose by 0.18% from 6.21% to 6.39%, while five-year fixed-rate mortgages increased by 0.07% from 5.77% to 5.84%. However, two-year variable-rate mortgages with a 75% LTV experienced a slight decrease of 0.03% to reach 5.49%.
Average BTL Rates in July 2023
With buy-to-let mortgages, average rates increased again slightly. Across all lenders, two-year fixed buy-to-let mortgages with a 75% LTV rose from 6.79% to 6.89%, indicating a 0.1% increase. Lender Landbay currently offers the lowest rates across all lenders, with rates decreasing from 5.08% to 4.79%, showcasing a substantial drop of 0.29%. However, with the unpredictability of lenders at the moment, this could shortly change.
Commenting on the current mortgage rates, Kellie Steed, a mortgage expert at Uswitch, highlighted that while rates have been increasing since the mid-June 2023 base rate announcement, two-year fixes remain more expensive than five-year fixes. This suggests that the market anticipates stability in the longer term.
Steed further emphasised the value of consulting an experienced mortgage broker to navigate the current market. Despite average rates nearing 7%, two-year fixed rate deals are available as low as 5.81%, according to Mojo Mortgages data. Considering the average standard variable rate (SVR) at 8.45%, even higher fixed rate mortgages may be worth considering, depending on individual circumstances.
Speak To a Mortgage Expert About UK Interest Rates
As we have already said, interest rates at the moment are extremely volatile in the UK and getting a manageable and affordable rate can be a real challenge if you don’t know what you are doing. We can’t reduce rates, but what we can do as mortgage advisors is help you to secure a good rate, budget your finances so that you don’t struggle with your payments, and help you to create a plan of action for the future when rates eventually come back down. Call our team of experts today for a free initial mortgage consultation. We are here to help.