Best mortgage rates – August 2022


The Bank of England has now increased interest rates this month from 1.25% to 1.75% as the UK is expected to fall into recession. So 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.

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.

Bank of England raises interest rates

The Bank of England’s Monetary Policy Committee raised interest rates from 1.25% to 1.75% on 4th August. This is the sixth time the BoE has increased the base rate since December 2021. Interest rates are now at their highest level since December 2008 after the biggest single rise since 1995.

And it warns that households face the longest and deepest fall in living standards on record as energy bills triple and the UK plunges into a recession in the last three months of this year. If global energy costs remain where they are, the BoE said that recession will then last the whole of next year, with inflation barely below 10% even in a year’s time.

But this increase is unlikely to be the last. Speaking at the Resolution Foundation think tank, outgoing Monetary Policy Committee member Michael Saunders spoke recently about expectations that interest rates will have to rise to 2% or higher during the next year.

How do further rate increases affect my mortgage?

When rates go up, how does it affect your mortgage? Last month, the BoE said it expects 40% of all mortgages to rise in the next 12 months.

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, new deals are going to become more expensive so if you’re one of the thirty per cent of homeowners whose fixed-rate deal is coming to an end soon, you ought to plan ahead. It can take six months to remortgage.

Best mortgage rates August 2022

Following the trend we’ve seen for many months now, rates are up across the board. So if you’re looking for a new mortgage or are planning to remortgage in the next few months you should start looking at your options asap before the best rates disappear. Read our guide How to protect yourself from a mortgage rate rise.

Best 2 year fixed rate mortgage

There has been another jump in the best rates available on 2 year fixes. The lowest rate on a 2 year fix this month is from Barclays at 2.89%. You’ll need a 45% deposit and it has an arrangement fee of £749. However it’s only available for purchases.

If you’re remortgaging the best rate on a 2 year fix is from Metro Bank at 3.19%. You’ll need a deposit of 25% and it has an arrangement fee of £999. HSBC UK also offers this rate on a 2 year fix. However you’ll need a 40% deposit and it has an arrangement fee of £999.

Last month if you were buying a house the lowest rate on a 2 year fix was with The Cambridge Building Society at 2.54%. You needed a deposit of 25% and it had a booking fee of £199. If you were remortgaging AIB offered the lowest rate at 2.60%. And you needed a deposit of 10%.

Best 3 year fixed rate mortgage

While the best available rate on a 3 year fix is from Buckinghamshire Building Society at 3.29%. You’ll need a deposit of 20% and it has an arrangement fee of £999.

Last month the lowest rate on a 3 year fix was from Newbury Building Society at 3.19%.

Best 5 year fixed rate mortgage

While the lowest rate on a 5 year fix this month is from Barclays at 2.99%. You’ll need a deposit of 45% and it has an arrangement fee of £749. However it’s only available for purchases.

If you’re remortgaging the lowest rate on a 5 year fix is also from Barclays, at 3.10%. You’ll need a 40% deposit and it has an arrangement fee of £999.

Last month the AIB offered the best rate on a 5 year fix at 2.60% at 85% LTV.

Best 10 year fixed rate mortgage

The best 10 year fixed rate mortgage available this month is from First Direct at 3.34%. You’ll need a 40% deposit and it has a booking fee of £490. It’s available for purchases and remortgages.

Best variable rate mortgages

The lowest rate on a variable rate mortgage this month is from Beverley Building Society’s 3.47% discount for 2 years which has an initial rate of 1.77%. You’ll need a deposit of 35% and it comes with a rather hefty arrangement fee of £1,895.

Meanwhile the lowest rate on a variable rate mortgage last month was Furness Building Society’s 4.45% discount for two years, which had an initial rate of 1.44%. You needed a deposit of 20% and it had an arrangement fee of £999.

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 2.99%. It has an arrangement fee of £749.

And if you’re not in London, Barclays offers the 5 Year Fixed Help to Buy Equity Loan Scheme mortgage at 3.30%. It also has a £749 arrangement fee.

Green mortgage rates

For additional borrowing, Platform, the intermediary brand of the Co-operative Bank, offers existing customers a 5 year fix at 2.94% to 60% LTV with no fee. And at least half of the borrowing must be used for green home improvements like installation of solar panels, a boiler upgrade or loft insulation.

Borrowers must also use an online tool, launched by the bank and powered by Energy Saving Trust, which helps customers estimate their property’s Energy Performance Certificate rating, energy costs, CO2 emissions and potential options for updates and renovations and the cost saving benefits.

Get fee-free mortgage advice from our partners at L&C. Start online or give them a call today about your mortgage needs

 

Browse mortgage rates

Take a look at today’s best rates from lenders and get an overview of mortgage options now.

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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.

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.

Mortgage Finder

Get fee free mortgage advice from our partners at L&C. Use the online mortgage finder or speak to an advisor today.

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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.