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Best mortgage rates: Compare fixed rate and tracker rate mortgage deals

The average mortgage rate is starting to edge down, as lenders bring back their full range of products and launch tantalising deals with interest of less than 1 per cent for those with lots of equity or big deposits.  

For the first time in a year, both the average two-year and five-year fixed rate fell in July, according to finance experts Moneyfacts. 

Typical two-year fixes are now sitting at 2.55 per cent and 2.78 per cent respectively, having reduced by 0.04 per cent in the previous month. 

They are still higher than their equivalent rates year-on-year, as July 2020 saw record lows of 1.99 per cent and 2.25 per cent – though those figures were skewed by lenders removing higher-interest, low-deposit mortgages from the market during the pandemic. 

The number of mortgage deals available to borrowers has now risen to its highest level since March 2020, at 4,500. 

The mortgage market is opening up again after deals were pulled at the start of the pandemic

There is some good news for first-time buyers, who have had a much harder time finding a mortgage since low-deposit deals were pulled at the beginning of the pandemic.  

Mortgages for those with ten per cent deposits started to return to the market at the beginning of this year, and there are now 538 products available. In July 2020, there were just 70.

More recently, lenders have begun to relaunch five per cent deposit mortgages, and there are now 253 of these to choose from. 

The Government is underwriting deals with some lenders under a new mortgage guarantee scheme, and this has given other banks and building societies the confidence to launch their own low-deposit offerings. 

However, first-time buyers might find themselves paying almost four times as much interest as a home mover with a large deposit.    

The typical two-year fixed rate on a 5 per cent deposit mortgage is 3.79 per cent, according to Moneyfacts, while those with 40 per cent deposits can take advantage of rates as low as 0.94 per cent. 

See our best rates round-up below for more details.  

> Quick link: Use our calculator to find mortgage rates for you 

You can check best buy tables and the best mortgage rates for your circumstances with our mortgage finder powered by London & Country – and figure out what you’ll actually be paying by using our new and improved mortgage calculator.

What are the best mortgage deals?    

With mortgage rates hitting record lows for some borrowers, it could pay to switch.  

Borrowers on their lenders’ standard variable rates could save hundreds of pounds a month by taking a new deal, for example.

Mark Gordon, director of money at Compare the Market, said: ‘Languishing on a lender’s standard variable rate mortgage is likely to cost you thousands of pounds more than you need to pay.

‘While there are fewer mortgage products available on the market than usual at the moment, with the housing market slowly restarting again and physical property valuations able to take place once more, there are still plenty of good rates to choose from by looking around online.’

The attraction of a two-year fix may be lower rates now and extra flexibility, but that comes at the expense of needing to remortgage in two years to avoid slipping onto a more expensive standard variable rate.

A five-year fix gives the opportunity to lock into a low rate for a longer period and avoid extra fees and higher rates in a relatively short time.

Unless you have a good reason to take a two-year fixed rate, such as needing to move or expecting to have to sell your home, brokers have suggested that five-year fixed rates might be a cheaper long-term bet.

About what next for mortgage rates? 

This is our long-running mortgage rates round-up that looks at the mortgage market and what to consider when looking for a loan. 

It has been running for more than eight years and is regularly updated.

Older reader comments are left in place, so people can see what was being said in the past.

Whatever the right type of mortgage for your circumstances, shopping around and speaking to a good mortgage broker is a wise move.

Borrowers should have a quick look at the rates below. These are regularly updated by This is Money’s mortgage team. If you spot a deal you think has been pulled or should be in there, email us via [email protected] with mortgage rates in the subject field.

For a full rate check use This is Money’s mortgage finder service and best buy tables, these are supplied by our independent broker partner London & Country.  

Best fixed-rate mortgage deals

Bigger deposit mortgages

Five-year fixed rate mortgages    

Nationwide has a five-year fixed-rate mortgage at 1.04 per cent with a £999 fee at 60 per cent loan-to-value 

Natwest has a five-year fixed-rate mortgage at 1.09 per cent with a £995 fee at 60 per cent loan-to-value 

Two-year fixed rate mortgages      

Natwest has a two-year fixed-rate mortgage at 0.94 per cent with a £745 fee at 60 per cent loan-to-value 

HSBC has a two-year fixed-rate mortgage at 1.14 per cent with no fee at 60 per cent loan-to-value

Mid-range deposit mortgages

Five-year fixed rate mortgages 

Natwest has a five-year fixed-rate mortgage at 1.28 per cent with a £995 fee at 75 per cent loan-to-value 

HSBC has a five-year fixed rate mortgage at 1.29 per cent with a £999 fee at 75 per cent loan-to-value 

Two-year fixed rate mortgages      

Natwest has a two-year fixed-rate mortgage at 1.07 per cent with a £995 fee at 75 per cent loan-to-value 

Leeds Building Society has a two-year fixed rate mortgage at 1.07 per cent with a £999 fee at 75 per cent loan-to-value

Low-deposit mortgages

Five-year fixed rate mortgages

Platform has a five-year fixed-rate mortgage at 2.79 per cent with a £1,249 fee at 90 per cent loan-to-value

Leeds Building Society has a five-year fixed-rate mortgage at 3.02 per cent with no fee at 90 per cent loan-to-value  

Two-year fixed rate mortgages 

Platform has a two-year fixed-rate mortgage at 2.29 per cent with a £749 fee at 90 per cent loan-to-value

Bank of Ireland has a two-year fixed rate mortgage at 2.56 per cent with no fee at 90 per cent loan-to-value 

 >> Check our our mortgage tracker to compare all of the available deals

A note on rates 

Rates can change on mortgages at short notice and sadly lenders do not always inform us when they alter them (especially if they raise rates rather than lower them). 

This can lead to occasions when the rates listed here are not available. If you ever spot this situation – or a good rate we have not listed – please email [email protected] with mortgage rates in the subject line and we will update the round-up asap.

Best tracker rate mortgages 

Tracking a 0.10 per cent Base Rate may seem an odd decision when rates are likely to only go up – and you could fix for up to five years at a lower rate – however, there is one big advantage to a good lifetime tracker: flexibility.

A fixed-rate mortgage will almost inevitably carry early repayment charges, meaning you will be limited as to how much you can overpay, or face potentially thousands of pounds in fees if you opt to leave before the initial deal period is up.

You should be able to take a good fixed mortgage with you if you move, as most are portable, but there is no guarantee your new property will be eligible or you may even have a gap between ownership.

A good lifetime tracker has no early repayment charges, you can up sticks whenever you want and that suits some people.

Make sure you stress test yourself against a sharper rise in base rate than is forecast. 

Lifetime trackers   

Melton BS has a lifetime discounted variable rate at its SVR minus 3.00 per cent for the term, currently at 1.99 per cent with fees of £290 at 75 per cent loan-to-value

First Direct has a tracker at base plus 2.09 per cent for the term, currently at 2.19 per cent with fees of £490 at 60 per cent loan-to-value

Shorter trackers   

Natwest has a two-year tracker at base plus 0.90 per cent with fees of £745 at 75 per cent loan-to-value

Leek BS has a two-year discounted variable rate at its SVR minus 4.20 per cent, currently at 0.99 per cent, with fees of £1,495 at 75 per cent loan-to-value 

Watch out for discount rates, as these track a rate set by the lender rather than following the path of the Bank of England base rate.

Most lenders move their internal variable rate in line with the base rate, but they don’t have to, meaning you could see your rate rise even if the base rate stays put.

Can you get a mortgage?  

Getting a mortgage is tougher than it once was. You will need to get your finances in order and be prepared for the lengthier application process and in-depth affordability interviews getting a mortgage requires nowadays.

Lenders also apply different standards to what they will lend.

Weigh up the above, check the rates here and in our best buy mortgage tables, have a scout around what the best deals look like – and speak to a good independent broker.

There are a couple of things to look out for if you do decide to fix.

You need to check the bumper arrangement fees are worth paying – if you don’t have a big mortgage you may be better off with a slightly higher rate and lower fee.

It’s also wise to think carefully about whether you expect to move home soon. A good five-year fix should be portable, so you can take it with you.

But your new property will need to be assessed and you might need to borrow extra money, and so your lender could still say no. Getting out of a fixed rate typically requires a hefty hit to the pocket from early repayment charges.

Today’s low rates may stick around, they may even inch a little lower, but they may also be swiftly axed.

If you think you’d kick yourself if you miss out on one, then set aside some time to consider what to do.

Compare true mortgage costs

Work out mortgage costs and check what the real best deal taking into account rates and fees. You can either use one part to work out a single mortgage costs, or both to compare loans

Choosing a mortgage – the essential quick guide

1. How big a deposit do I need?

To get the full choice of deals raising a decent deposit is still vital. The benchmark figure is 25 per cent, if you have this then you’ll be getting close to the best rates, although for an absolute cheapest deal you’re still likely to need 40 per cent.

However, a selection of better deals for smaller deposits is also now available.

2. Should I take a fixed rate?  

Most borrowers consider the security of a fixed rate as worthwhile, whereas variable rate deals can be cheaper but leave you exposed to potential rate rises.

If you decide to take a fix you need to carefully consider how long for. 

Two-year deals are cheap but only offer very short-term security and incur extra costs when you remortgage. 

Five-year deals lock you in for longer and come with slightly higher rates but better security and no need to remortgage in a relatively short space of time.

3. Should I take a tracker rate?

Tracker rates are essentially a gamble. What looks like a bargain rate now, could soon get very expensive when interest rates rise.

Anyone considering a tracker needs to make sure they are not just storing up a problem for the future. If the tracker comes with an early redemption penalty that would make it expensive to jump ship, then make sure your finances could take a rise of at least 2 per cent to 3 per cent in interest rates.

For that reason we at This is Money like tracker deals that fit into one of these three categories: no early redemption penalties, a cap to how high the rate will go, or that let you jump ship for a fixed rate if rates rise.

4. Should I get off a standard variable rate?

Standard variable rates are what borrowers slip onto by default when they finish a fixed or tracker deal period.

They can typically be changed by lenders at any time – without the Bank of England moving rates, they may also rise or fall by more than any move in base rate.

A number of mortgage borrowers have fallen victim to lenders hiking their standard variable rates, despite the base rate remaining stable. 

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