Mortgages.scot

The news continues to be rising rates across all lenders. I am looking here at a property purchase of £250,000 with an 85% LTV giving a loan of £212,500 on a repayment basis over 25 years. There are of course better deals at some lenders the lower the LTV goes, especially if simply looking for a rate switch. That said, lenders are not giving much whichever way I look at it.

Fixed Rate Deals

Fixed rates remain the most popular option at the moment. Given the knowledge that rates are likely to continue rising, homeowners are looking to ride out the storm as it were with a longer fixed-rate deal.

The hope is that by the time that ends we will be in a better place from a rates perspective.

Looking at 2, 5 and 10-year fixed rates across 25 lenders and over 100 products. I am ignoring subprime lenders and sticking only with mainstream high-street lenders.

• 2-year fixed. The cheapest is 5.64%, and the Most expensive is 6.85%
• 5-year fixed. The cheapest is 5.39%, and the Most expensive is 6.64%
• 10-year fixed. The cheapest is 5.14%, and the Most expensive is 7.25%

Discounted Variable Rate Deals

There are reasons even with the current climate why a variable rate deal with a discount may be a preferred option. The current rates for these are shown below. There are fewer variable-rate deals out there. I found 51 across 19 lenders.

• 2-years. The cheapest is 2.89%, and the Most expensive is 6.7%
• 5-years. The cheapest is 3.04%, and the Most expensive is 4.84%
• 10-years. None available.

Remember that these are the discounted rate which does not include the base rate currently at 2.25%. The cheapest deal of 2.89% then becomes 5.14%. If the base rate increases as expected next month by 0.5% then the rate will increase to 5.64%.

Change in cost of mortgage since November 2021

An average deal in November 2021 was 1.2% for a 2-year fixed, a 5-year fixed was 1.6% and a 10-year fixed at 2.6%.

Using the same facility of a property valued at £250,000, 85% LTV giving a loan of £212,500 the differences in just 11 months are sobering.

• 2-year fixed was £830, today it would cost £1,323, an increase of £493.
• 5-year fixed was £860, today it would cost £1,291, an increase of £431.
• 10-year fixed was £964, today it would cost £1,260, an increase of £296.

Notes

I am focusing on a new purchase for consistency. Aside from that, it is more difficult to get a clear image of what lenders may offer existing clients looking to rate switch. Although the word on the street is that there is little difference.

I will provide a similar update next month and see where we get to. Unfortunately, I see no reason to believe the position will not have gotten worse.