Best mortgage rates – September 2022
As the Bank of England raises interest rates to 2.25% and with financial markets betting interest rates will hit 4% by next May, it’s more important than ever to check you're on the best mortgage deal. Read on for the best rates, including fees, best remortgaging deals, best 5 year fixed rate, Help to Buy mortgage deals, green mortgage deals and more this month.
The Bank of England has raised interest rates for the seventh time in a row, from 1.75% to 2.25%, as the bank battles to stem inflation, currently at 9.9%.
The Bank also warned the UK may already be in a recession.
And when it comes to interest rates it looks like further increases are on the cards. Financial markets are betting interest rates will hit 4% by next May.
Whenever interest rates are increased this has a knock on effect on mortgage rates so it’s vital to check how the increase will affect your mortgage.
Could you save thousands by acting quickly?
Some of the best available mortgage rates are rising quickly. For example at the start of this month, if you were remortgaging and looking for a 2 year fix, the best available rate was from Barclays at 3.24%. But now if you’re remortgaging, Platform offers the lowest rate on a 2 year fix at 3.85%.
David Hollingworth at L&C Mortgages, says. “Mortgage rates have been rising rapidly and homeowners who don’t shop around for the best deals could find themselves paying even more than they need to. Lenders have typically been passing on the latest base rate rise to those on standard variable rates, which are higher than the best deals on the market.”
Paula Higgins, CEO of HomeOwners Alliance commented, “In a world where rates are increasing monthly, we strongly recommend homeowners seek advice sooner rather than later. Whether you’re approaching the end of your current mortgage deal or wondering if it’s worth switching now, it’s critical to get advice. A mortgage broker can shop around for you, help you decide whether to make the switch, will take account of any early exit fees, and identify the best overall fit for you. And if you use a fee-free broker, you’ve nothing to lose.”
How do increases to the base rate affect my mortgage?
The amount a rise in the base rate of interest will cost you will depend on what type of mortgage you have.
If you’re on a tracker mortgage, an increase to the base rate will mean your monthly mortgage payments would increase as well.
While if you’re on a Standard Variable Rate your payments may increase as well. But your lender decides how much, if any, of the increase they would pass on. And if it wanted to your lender could increase rates by more.
If you’re on a fixed rate mortgage you will only see a change in your repayments when your fixed term ends. However, as we have explained, new deals are becoming more expensive. So if you’re one of the 30% of homeowners whose fixed-rate deal is coming to an end soon, you ought to plan ahead. It can take six months to remortgage.
Should you fix for longer?
Many homeowners are opting for 5 year mortgages with a number of lenders offering cheaper rates if borrowers agree to a tie in for longer. These can be appealing to borrowers as they give peace of mind for a longer period. However by tying in for longer you may miss out on better rates that could become available in the next two or three years if interest rates come down.
Best mortgage rates September 2022
Following the trend we’ve seen for many months now, rates are up across the board. So if you’re looking for a first mortgage or are planning to remortgage in the next few months you should start looking at your options asap before the best rates disappear. The best way to to protect yourself from a mortgage rate rise is by asking a fee-free mortgage broker to check you’re on the best rate.
Best 2 year fixed rate mortgage
So what’s happening with 2 year fixes? The simple answer is rates have gone up. The lowest rate on a 2 year fix this month is from Barclays at 3.04%. You’ll need a 45% deposit and it has an £749 arrangement fee. However it’s only available for purchases. This rate is a jump up from last month when Barclays offered a 55% LTV mortgage at 2.89%.
And if you’re remortgaging, Platform offers the lowest rate at 3.85%. You’ll need a 40% deposit and it has an arrangement fee of £1,499. Last month the best rate on a 2 year fix if you were remortgaging was from Metro Bank at 3.19%.
Best 3 year fixed rate mortgage
While the best available rate on a 3 year fix this month is also from Platform at 3.84%. You’ll need a 40% deposit and it has an arrangement fee of £1,499.
The lowest rate on a 3 year fix last month was from Buckinghamshire Building Society at 3.29%.
Best 5 year fixed rate mortgage
When it comes to 5 year fixes, rates are also up. However, you’ll see the best available rates on 5 year fixes are lower than the best available rates for a 3 year fix.
The lowest rate on a 5 year fix this month is from Barclays at 3.14%. You’ll need a deposit of 45% and it has an arrangement fee of £749. But it’s only available for purchases. This is up from the lowest rate on a 5 year fix last month which was also from Barclays, but at 2.99%.
While the lowest rate on a 5 year fix this month if you’re remortgaging is from Lloyds Bank at 3.73%. You’ll need a 40% deposit and there’s no arrangement fee. The lowest rate on a 5 year fix last month if you were remortgaging was from Barclays at 3.10%.
Best 10 year fixed rate mortgage
When it comes to 10 year fixed rate mortgages the best rate available this month is from Barclays at 3.65%. You’ll need a 40% deposit and it has an arrangement fee of £999. This is quite a leap from the best 10 year fixed rate mortgage available last month which was from First Direct at 3.34%.
Best variable rate mortgages
The lowest rate on a variable rate mortgage this month is from Beverley Building Society’s 3.17% discount for two years which has an initial rate of 2.07%. You’ll need a 20% deposit and it has an arrangement fee of £995. But it’s only available for purchases. If you’re remortgaging, Newbury Building Society offers the 2.11% discount for 3 years with an initial rate of 2.34%. You’ll need a deposit of 25% and it has an arrangement fee of £850.
Last month the lowest rate on a variable rate mortgage was from Beverley Building Society’s 3.47% discount for 2 years which had an initial rate of 1.77%.
Best Help to Buy mortgage rates
While if you’re looking for a Help to Buy mortgage Barclays offers the 5 year Fixed London Help to Buy Equity Loan Scheme mortgage at 3.14%. It has an arrangement fee of £749.
However if you’re not in London Barclays offers the 5 Year Fixed Help to Buy Equity Loan Scheme mortgage at 3.45%. It also has a £749 arrangement fee.
(But remember the Help to Buy deadline is fast approaching. The final date you can reserve a Help to Buy home is 31 October 2022.)
Green mortgage rates
And when it comes to green mortgage rates, NatWest will now offer its green rates on new build properties from certain developers even if the EPC isn’t available at the time of applying. The lender usually requires the property to have an EPC rating of A or B and this move recognises that new build homes typically meet those higher standards.
NatWest offers a Green 5 year fix at 3.79% for purchases, up to 75% LTV with a £995 fee. That is 0.10% lower in rate than the standard 5 year from NatWest at 3.89%.
This is available through advisers on properties from a range of large developers. However if there is an EPC available that doesn’t meet the A or B requirement the property wouldn’t be eligible.
Is now a good time to remortgage?
While we have seen some of the cheapest mortgage deals disappear from the market over the last few months, there are still some good rates available. But if you want to remortgage, you should act quickly to grab deals before they disappear.
Due to the current high demand, it is taking longer to remortgage than in previous years.
If you’re on a SVR, locking into to a fixed rate not only means you will have certainty over how much you’ll be paying on your mortgage each month but you may also find your repayments drop too.
If you’re locked into a deal, you may still be able to save by remortgaging onto a better deal. But you should check if you need to pay any fees like an early repayment charge. It’s a good idea to speak to a broker who can talk you through your options. They’ll also crunch the numbers for you – you may find that even after you pay any fees you’re still going to be better off by remortgaging.
What are mortgage rates?
Mortgage rates are the rate of interest charged by a mortgage lender (bank or building society). The interest is charged by the lender as compensation for the money they have lent them in order to purchase a property.
Interest rates are determined by the lender in most cases, and can be either fixed (ie remain the same for the term of the mortgage) or variable (where they fluctuate with a benchmark interest rate). Before you compare mortgages, you need to understand the different types.
Help finding the best mortgage deal
The best mortgage deal isn’t just about interest rates. You need to consider whether the mortgage term is right for you, arrangement fees and more.
To get a better idea of the best mortgage for you, use our online mortgage service provided by Mortgage Tree.
Mortgage Tree can compare the latest mortgage deals for you over the phone, or you can do it yourself in real-time online. Whichever you choose they can help search the market to find you the best mortgage deal, see if you qualify and even help you apply online, doing all the legwork to get you your mortgage offer.