Best mortgage rates (July 2020)
As the world tackles coronavirus, what's happening with mortgages? See what the experts are saying, check you have the best mortgage deal, compare rates this month and find the best mortgage for you.
Finding the best mortgage rates in a sea of mortgage deals is hard work. So every month we’ll be showcasing the best deals for you, with input from the mortgage experts at L&C.
Finding the best mortgage rate is critical as it will determine how much you can afford to borrow, how much your monthly repayments are and is ultimately about securing one of your most basic needs – a roof over your head.
What’s happening with mortgages this July
As we approach 2 months of the English housing market being re-opened to business, we continue to see an increase in activity in the mortgage world.
Viewings are now taking place, conveyancers are back to work and valuers are back undertaking physical valuations.
This has released a lot of pent up demand. Lenders have been inundated with mortgage applications and struggling to cope. This has led to many temporarily withdrawing mortgage products.
David Hollingworth, at L&C Mortgages, says: “Lenders’ temporary withdrawals from offering deals to those with smaller deposits means that the availability of mortgages up to 90% LTV and beyond remains extremely limited.”
He added, “If consumers can push to a larger 15% deposit, then they will open up a broader choice as well as benefiting from better rates.”
Some of the lenders that did pull out temporarily have come back with some products up to 90% LTV. But these may be more limited in scope. For example, Accord has come back to the market but made their 90% mortgage available to first-time buyers only.
The 95% mortgage market is virtually non-existent at the moment.
Lenders continue to be kept busy with mortgage holiday applications, which have now been extended beyond June to end October 2020.
According to UK Finance 1.9 million mortgage payment holidays have been issued as of June 2020 – equivalent to a sixth of all mortgages in the UK.
Get fee-free mortgage advice and check you’re on the right deal today. Online or on the phone with our partners at L&C
Remortgaging in July 2020
Mortgage rates are still low which is good news for remortgage borrowers looking to get a better deal in place.
If you are approaching the end of your current mortgage deal, particularly in the next three months, you can still take advantage of some very attractive rates, irrespective of Loan to Value.
What’s new this month?
Despite there being some speculation that the Bank of England may need to consider taking the Base Rate into negative territory there is little sign of borrowers shifting away from their preference for fixed rates.
Some may like the idea of a tracker to benefit from any cut but it’s important that borrowers understand the terms of any variable deal. Some trackers will limit the potential for any fall by applying a minimum rate, often referred to as a collar or floor. A discounted rate is pegged to the lender SVR so there’s no guarantee the lender will move in line with base rate in any case.
Add to that the fact that some fixed rates have been getting more competitive and we can expect to see borrowers continuing to take advantage of the ultra low rates and lock-in their deal. Some two year rates are now below 1.20% and 5 year fixed rates offer a wide choice below 1.50% with some edging below 1.40%.
Barclays have also just launched a new 10 year fixed rate. It has brought the lowest rate on a long term deal below 2% to offer outstanding long term security for borrowers that are prepared to lock in.
Borrowers will need to think carefully before jumping in. Early repayment charges on long term deals usually persist throughout the fixed rate period. Whilst you can port the mortgage, flexibility will be limited if you need to review at any time in that 10 years.
For example, if top up borrowing was required there is no guarantee that the lender would be able to offer the borrowing required or at what rate. That could mean looking elsewhere, which would incur an early repayment charge which could amount to thousands of pounds.
Help finding the best mortgage rates
Whether you’re looking for a first mortgage, a buy to let mortgage or want to see if you can get a better deal by remortgaging, use the charts below to browse mortgage rates online.
Browse mortgage rates
Take a look at today’s best rates from lenders and get an overview of mortgage options now.
Your home or property may be repossessed if you do not keep up the repayments on your mortgage.
Representative example A mortgage of £204,302 payable over 23 years, initially on a fixed rate until 31/12/24 at 1.56% and then on a variable rate of 5.05% for the remaining 18 years would require 62 payments of £881.42 and 214 payments of £1,168.08. The total amount payable would be £305,690 made up of the loan amount plus interest (£100,315) and fees (£1,073). The overall cost for comparison is 3.6% APRC representative.
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. For more information see what type of mortgage should I get?
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 the fee-free mortgage broker L&C.
L&C 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.
Handy tools and calculators
Here’s a selection of practical gadgets and tools to help keep things simple.
How much can I borrow?
A quick check to find out what size mortgage you can get on your income.How much can I borrow?
How much will my mortgage cost?
Find out how much your payments would be each month.Mortgage monthly cost
Stamp duty calculator
Find out how much you will need to pay in stamp duty.Stamp duty calculator