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Average Mortgage Interest Rates in the UK

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Average Mortgage Interest Rates in the UK
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The timing of selling or buying a house is always very important. When you decide to make this big decision is often significantly affected by the Mortgage Interest rates at that time. This makes it important for you to have clear information on this topic.

Keeping track of mortgage interest rates – including the best and the worst deals – is always challenging. This is mainly the case because the rates can change on an almost daily basis.

If you want an overview of the average UK mortgage interest rates, keep on reading.

The current average UK mortgage interest rates 

The mortgage rate you secure when purchasing a property determines how large of an initial deposit you put down, and how much interest you will have to pay on the sum that has been lent to you. 

The interest rate you can benefit from will also vary depending on a number of other factors, such as the cost of the house being discussed. 

The average figures listed below are based on the latest data available, assuming you want your fixed-rate mortgage to last for 40 years, and are calculated with a deposit on a £300,000 house, with a 2-year initial term deal.

95% LTV 

The average mortgage rate for a £300,000 house at 95% LTV in May 2022 is 3.01%. This LTV rate is most commonly sought after by first-time buyers who have less of a deposit available to them.

90% LTV 

The average mortgage rate for a £300,000 house at 90% LTV in May 2022 is 2.85%. A 10% deposit on a house is one of the most common arrangements in the UK, so an LTV in this region is common.

85% LTV 

The average mortgage rate for a £300,000 house at 85% LTV in May 2022 is 2.70%. This is noticeable better than the rate for 90% LTV, which means that if you can accord this extra 5% deposit, it is definitely worth considering.

80% LTV 

The average mortgage rate for a £300,000 house at 80% LTV in May 2022 is 2.61%. On a £300,000 house, this would represent a £60,000 deposit, which typically isn’t affordable to first-time buyers, but may be doable for people who have already owned their first property.

75% LTV 

The average mortgage rate for a £300,000 house at 75% LTV in May 2022 is 2.53%. This is a significant reduction from the 80% LTV rate, because lenders want to reward buyers who can put down a sizeable deposit.

70% LTV 

The average mortgage rate for a £300,000 house at 70% LTV in May 2022 is 2.53%. This is the same as a 75% LTV rate, which means that you should look very carefully at whether depositing an extra 5% is worthwhile.

65% LTV 

The average mortgage rate for a £300,000 house at 65% LTV in May 2022 is 2.52%. This is a very marginal increase on both 70% and 75% LTV – and you should therefore once again look carefully at whether this is the right option.

60% and under LTV 

The average mortgage rate for a £300,000 house at 60% LTV in May 2022 is 2.48%. In this instance, the lenders reward individuals for being able to put down a sizeable deposit on their property. If the deposit is larger than 40%, then the LTV may be even lower than 2.48%.

What’s happening with UK interest rates? 

Since December 2021, interest rates have gone up significantly in the UK. It was first increased from 0.1% to 0.25% in December 2021.

Since then, the interest rate has increased three more times: up to 0.5% in February 2022; up to 0.75% in March 2022; and then up to 1% in May 2022.

Why are mortgage rates rising? 

The mortgage interest rates have recently been increased as the banks attempt to reduce the rate of inflation in the UK. There is particular emphasis on slowing down inflation at the moment, because the Consumer Prices Index (CPI) measure of inflation surged ahead by 9% in the 12 months to April 2022, marking its highest level for 40 years.

Increasing interest rates helps to slow down inflation, because individuals are encouraged to save more money, and therefore spend less, which reduces the rate of inflation.

Will mortgage interest rates go down soon?

Although nothing is definite – and even the Bank of England cannot conclusively predict what will happen over the next few years – it is unlikely that mortgage interest rates will go down for a while. This is because the cost of living in the UK is continuing to go up, as is the rate of inflation. 

Furthermore, you should keep in mind that even if you do see some organisations reducing their interest rates, this is often done because it comes with additional fees attached.

You should also remember that even though mortgage interest rates change on a daily basis, the cheapest rates are often reserved for larger deposit amounts. In many cases, this will be for 60% of the property value or more.

Therefore, while the average mortgage interest rates are unlikely to go down for a while… if you see someone offered a reduced rate, check whether there are any hidden catches. It may be too good to be true.

Sell your house with WeBuyAnyHome

If you want to sell your house fast, we can buy it in just seven days. We’ll give you a guaranteed completion date so you know when the money will hit your account. We’ll also let you live their rent free for a short period after the sale, so you have more time to prepare your next move. 

Even if you have a small early repayment charge due, the money you save working with us by stopping mortgage payments as soon as possible, avoiding solicitor’s fees and not using estate agents, may make it worthwhile. 

It’s important to look through your figures carefully before making a decision. We’re also happy to chat with you about your situation and whether we’d be a good option. So please get in touch.

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