The best mortgage rate is the one that costs you the least across the whole deal, not simply the one with the lowest headline interest rate. YesCanDo Money are a fee-free, family-run mortgage broker, and we search the whole of the market to work out which deal comes out on top for your circumstances. Below you will find the current best mortgage rates, how the different mortgage types compare, and what you can do to qualify for a better rate. If you would rather we did the searching, you can book a call with a mortgage adviser and we will do it for you.
Overview of the current best mortgage rates in the UK
Mortgage rates in the UK change constantly. The Bank of England base rate, the health of the UK economy and conditions in global markets all feed into what lenders are willing to offer. Rates are higher than they were a few years ago, but lenders are still competing hard for business, and that competition works in your favour.
There is no single best mortgage rate that applies to everyone. What you are offered depends on your credit history, the size of your deposit, the type of property you are buying, and how much you need to borrow compared with the value of that property.
Which bank has the best mortgage rates?
No single bank holds the best mortgage rate for long, because the lender at the top of the table changes daily. There are over 99 banks and building societies lending in the UK, and between them they offer over 14,000 mortgage products, so the picture moves constantly. Finding the best mortgage lenders on any given day is a full-time job.
A whole-of-market mortgage adviser compares the total cost of each deal rather than the headline interest rate alone. That distinction matters more than most people expect. A low rate attached to a high arrangement fee can work out considerably more expensive over a two-year deal than a slightly higher rate with no fee at all, and the section below shows exactly how.
Best mortgage rates table
The table below shows the mortgage lenders currently offering the lowest interest rates. It is based on the current average property price in England of £293,000, with a mortgage of £234,400. That is an 80% loan to value, meaning a deposit or equity of 20%, which is where a great many buyers and remortgagers in England sit.
Because the table is built on an England average, it is a snapshot of the market rather than a quote. If your deposit is larger or smaller than average, the rates available to you will differ, and the gap between loan to value bands can be considerable. The gap between the leading mortgage lenders is usually small, and whoever is at the top today may not be there next week, so weigh the arrangement fee against the rate before deciding which deal is actually cheapest for you. The next section shows why that matters.
Mortgage comparison tool
Comparing mortgage offers side by side is the quickest way to see what is realistically available to you. Use the tool below to compare current rates, then speak to one of our fee-free advisers to find out which of those deals you would actually qualify for.
We plant a tree for every mortgage we complete.
Why the lowest rate is not always the cheapest mortgage
Arrangement fees are where the headline rate stops telling the whole story. Take a £250,000 repayment mortgage over 25 years, comparing a two-year fixed rate at 4.2% carrying a £1,499 arrangement fee against one at 4.4% with no fee at all.
- At 4.2%, you pay roughly £1,347 a month.
- At 4.4%, you pay roughly £1,375 a month.
The lower rate saves you around £28 a month, which comes to about £672 across the two-year deal. You paid £1,499 to get it. The deal with the higher interest rate leaves you roughly £827 better off, and it is the one that would sit further down almost every best buy table you will find online. Those figures are an illustration rather than a quote, but the pattern holds constantly, and it is the single most common reason people end up on the wrong mortgage.
The size of the loan changes which way it falls. On a larger mortgage the monthly saving is bigger, so a fee can be worth paying. That is the calculation worth running on every deal you are shown, and it is the first thing we do when we compare the market for a client.
Why comparing UK mortgage rates matters
Comparing rates properly, rather than taking the first offer you are shown, puts you in a much stronger position. It allows you to:
- Check that the deal in front of you is genuinely competitive against the rest of the market.
- Understand which way rates are moving before you commit to a fixed period.
- Avoid losing several thousand pounds over the term by settling for a higher rate than you needed to.
- Spot the fees and clauses that affect what you actually pay each month.
- Weigh up how flexible each mortgage is, including whether you can make overpayments without a charge.
Types of mortgage in the UK
The UK market offers several different mortgage types, and each one suits a different set of circumstances. Here is how they compare, with a fuller explanation of each behind the links.
Fixed-rate mortgages
A fixed-rate mortgage locks your interest rate in place for a set period, so your monthly repayments stay the same throughout. This is particularly useful when rates are expected to rise.
- Advantages: Your repayments are predictable, and you are protected if rates go up during the fixed period.
- Considerations: Fixed rates usually start higher than variable rates, and you will not benefit if rates fall while you are tied in.
Variable rate mortgages
A variable rate mortgage follows your lender’s standard variable rate, which they can raise or lower whenever they choose. Your repayments move up or down with it.
- Advantages: The starting rate can be lower than a comparable fixed rate, and your payments fall if the standard variable rate is reduced.
- Considerations: You cannot predict what you will pay from one month to the next.
Tracker mortgages
Tracker mortgages are a form of variable rate mortgage, but they follow a set external rate, usually the Bank of England base rate, rather than the lender’s own standard variable rate.
- Advantages: If the base rate is falling, a tracker passes that reduction straight on to you.
- Considerations: The reverse applies, so your repayments rise with the base rate.
Interest-only mortgages
An interest-only mortgage means your monthly payments cover the interest alone. The amount you originally borrowed stays exactly the same throughout the term, and you repay it in full at the end.
- Advantages: Monthly payments are lower than on a repayment mortgage, which can make a larger loan affordable.
- Considerations: You need a credible plan for repaying the full amount at the end of the term, and lenders will ask to see it. You will also pay more in interest overall.
Discount mortgages
A discount mortgage sets your rate at a fixed amount below your lender’s standard variable rate for an agreed period.
- Advantages: The starting rate is lower than the standard variable rate, which reduces your payments early on.
- Considerations: The discount applies to a rate your lender controls, so if they raise it, your payments rise even though the discount has not changed.
Offset mortgages
An offset mortgage links your savings account to your mortgage. Your savings are set against the balance, and you pay interest only on the difference between the two.
- Advantages: You can reduce the interest you pay considerably, and you keep access to your savings rather than locking them away.
- Considerations: Rates on offset mortgages are typically higher than on standard residential mortgages, so you need a reasonable level of savings for the arrangement to pay for itself.
For a fuller comparison, see the different types of mortgage explained.
Not sure which mortgage type suits you?
Choosing between a fixed rate, a tracker and an offset mortgage depends on your circumstances rather than which one looks cheapest today. Our advisers will talk you through the options and what each one would cost you, at no charge.
Book a call with a fee-free adviser, or call us on 033 0088 4407.
How to get the best mortgage rates
The rate you are offered is not fixed in advance. There are several things you can do to put yourself in a better position before you apply.
Improve your credit score
Your credit score tells a lender how reliably you have handled borrowing in the past. A stronger score usually gives you access to better rates.
- Check your credit report for errors and have any mistakes corrected. You can get a free credit report with Checkmyfile here.
- Pay every bill on time, including mobile phone contracts and subscriptions.
- Reduce your outstanding debts before you apply.
- Avoid making several credit applications in a short space of time.
Save a larger deposit
The larger your deposit, the lower your loan to value, which is the amount you are borrowing expressed as a percentage of the property’s value. A lower loan to value usually means a better rate, because the lender is taking on less risk.
- Set aside a fixed amount every month rather than saving whatever is left over.
- Look at the government schemes available to first-time buyers.
- A gifted deposit from family can help, but your lender will need a letter confirming it is a gift rather than a loan.
Compare the total cost, not the rate
As the worked example above shows, the cheapest interest rate is not always the cheapest mortgage. Before you compare one deal against another, add up the booking fee, the arrangement fee and any early repayment charge, then look at what it costs you across the whole deal rather than per month.
How a mortgage broker helps
A mortgage broker sits between you and the lenders, and the job is to know how each one assesses an application before you make it.
- Personalised mortgage advice: No two applications are the same. Your adviser looks at your income, your outgoings, your deposit and the property itself before recommending anything.
- Access to broker-only deals: Some mortgage deals are only available through brokers and are not offered to customers who approach the lender directly.
- A simpler application: Mortgage applications involve a great deal of paperwork. Your adviser prepares and submits it for you, which means very little work from you.
- Help with complicated cases: If you are self-employed, have a poor credit history, or are buying a property lenders treat as unusual, a broker knows which lenders are likely to consider your application.
- Protecting your credit file: Applying to a lender who was never going to accept you leaves a search on your record. A broker checks the criteria first.
Steve’s view on comparing mortgage rates
The cheapest rate on a comparison table is rarely the cheapest mortgage. Most people compare interest rates, choose the lowest rate, and never work out what the arrangement fee did to the total. On a smaller mortgage a fee of £1,499 can wipe out the whole saving that the lower rate gave you. On a larger mortgage the same fee can be well worth paying. The calculation comes out differently for every client, and it is the first thing we run before we recommend anything.
The other thing worth saying is that the mortgage lender at the top of the table is not always the mortgage lender who will accept you. Knowing which lenders are genuinely saying yes this month matters just as much as the rate itself.
Steve Roberts, Founder of YesCanDo Money
If you would like us to compare the market for you, you can book a call with a fee-free adviser at a time that suits you. There are no broker fees to pay.
5 Factors that affect mortgage rates
Rates move for reasons that sit well outside any individual application. These are the main ones.
1) The Bank of England base rate
The base rate is the single biggest influence. It sets what it costs banks to borrow, and that cost is passed on to customers. When the base rate rises, lenders usually follow fairly quickly. When it falls, they tend to reduce their rates more slowly, and some do not reduce them at all.
2) Economic indicators
The wider health of the UK economy shapes what lenders offer. High inflation tends to push rates up, while a slowing economy can push them down as banks try to encourage borrowing. Employment figures, growth and consumer confidence all feed into those decisions.
3) Lender criteria and your loan to value
Every lender sets its own criteria, and loan to value is usually at the centre of them. Borrowing a smaller proportion of the property’s value generally gets you a better rate, because the risk to the lender is lower. Your employment status, how stable your income is, and how much of that income is already committed to other debts all count as well.
4) Global economic conditions
Events elsewhere in the world affect UK mortgage rates. Financial crises, geopolitical tension and major policy changes in large economies all influence investor confidence, and that confidence feeds through into what UK lenders can offer.
5) The regulatory environment
Rules set by the Financial Conduct Authority shape how lenders assess affordability and how much they are willing to lend. Changes aimed at responsible lending or financial stability can move rates across the whole market.
Frequently asked questions
What are the best mortgage rates at the moment in the UK?
The best rate available today depends on who is asking. Lenders compete closely on their headline rates, and the one in first place changes regularly. What you are personally offered comes down to your credit history, the size of your deposit, the mortgage type you choose and your overall financial position. A rate advertised as a best buy may not be one you qualify for, so it is worth speaking to an adviser who can tell you what is realistically available to you.
What is the best bank for a mortgage in the UK?
There is no single best bank for a mortgage, because lenders assess applications differently. A bank offering one of the lowest rates on the market may decline an application it considers too complex, while a smaller building society with a slightly higher rate accepts it without difficulty. The right lender for you is the one whose criteria match your circumstances, which is why comparing the whole market matters more than picking a brand you recognise.
Which bank has the lowest interest rate on a mortgage?
Whoever holds the lowest rate today will probably have lost it within a fortnight, so any answer published here would be out of date almost immediately. The more useful point is that the lowest rate is often not the cheapest mortgage. On a £250,000 mortgage over 25 years, a rate 0.2% lower saves you around £28 a month, or £672 across a two-year deal. If that rate carries a £1,499 arrangement fee, you have paid £1,499 to save £672. Work out the total cost of each deal rather than tracking the top of the best buy tables.
Is a five-year fixed rate mortgage worth it?
A five-year fixed rate keeps your repayments the same for five years, which protects you if rates rise during that period. That security usually comes at a slightly higher starting rate than a two-year fixed rate, and you may face an early repayment charge if you need to leave the deal early. Whether it is worth it depends on how settled you are in the property and how likely rates are to move over the next few years.
Getting the right mortgage rate
Lenders assess your circumstances differently, which is why the best mortgage rate on paper is rarely the best mortgage rate for you. Comparing the whole market, adding up the fees behind each rate and knowing which lenders are likely to accept your application will save you far more than chasing a headline figure. Whether you are buying your first home or remortgaging, our advisers will do that comparison for you, so get in touch and we will find the right deal.
For rates from specific lenders and for particular mortgage types, see the pages below.
