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Many banks and building societies have increased their mortgage rates by over 1% since the war in the Middle East began, pushing up borrowing costs.

While some lenders still offer two-year fixes from 4.5%, others have pulled most of their sub-5% fixed rates, including big lenders like HSBC and Coventry Building Society. 

With higher rates, more borrowers will be wondering what they can do to lower their monthly costs, and two options include interest-only and Bank of England tracker mortgages.

Is it time to take out a tracker-rate mortgage? 

Most mortgage borrowing cost tables show how much cheaper the Bank of England tracker rates are than the fixes, especially for larger loans. This means many of the tracker rates are looking like a good bet.

Halifax has a two-year tracker at 0.21% over the current 3.75% Bank of England base rate. It has a £1,499 fee and no early repayment charges. Applicants need a 40% deposit to qualify. With the base rate potentially set to stay on hold and even come down if the UK economy struggles even more, so trackers could give borrowers an option to get out of fixing at a much higher rate.

While there is always the risk of the base rate rising and monthly payments going up with a tracker, many borrowers will think it’s a risk worth taking given the big price difference between trackers and most fixed rates.

Is a part interest-only mortgage an option?

With higher rates, part-interest-only and part-capital-repayment mortgages are also a good option to lower monthly costs. It is possible to get 50% interest-only and 25% capital repayment for a 75% loan-to-value mortgage through multiple lenders.

Santander has a great part interest-only mortgage policy

Santander has a great bit of criteria for higher earners, when any part of the mortgage is on an interest only basis and the borrower(s) has a 15% deposit plus a gross income of £200,000 or more, they can have 75% of the mortgage on interest only and 10% on capital repayment. For those earning less than £200,000 any lending over 50% loan-to-value must be on a capital and interest basis and 35% on capital repayment. 

Aaron Strutt, product director at Trinity Financial, says: "It is frustrating to see the fixed rate price increases still coming through, but we may well see more next week as swap rates are still fluctuating. At the moment, borrowers can get fixed rates around 0.5% cheaper by shopping around. Nationwide has some really cheap fixes which significantly undercut many of its competitors.

"Nationwide is still offering two-year fixes from 4.5% for home movers borrowing over £300,000, which significantly undercuts many of its competitors who are offering more fixes over 5%. If you are thinking about taking an interest-only, click here for our blog on making mortgage overpayments."

Speak to a Trinity Financial adviser today

The mortgage market moves fast — and the right advice can make a significant difference to the rate and deal you secure. Get in touch with our team to discuss your options.

Call Trinity Financial on 020 7267 9399 to secure a fixed or tracker rate mortgage, book a consultation, or use our appointment calendar

The information contained within was correct at the time of publication but is subject to change.

Your mortgage is secured on your property. Your property may be repossessed if you do not keep up repayments on your mortgage

NatWest is the latest big bank to announce it will raise its mortgage rates at midnight (today, 25th March), following Nationwide Building Society, Barclays, and Halifax's recent rate hikes.

NatWest's latest price rises are around 0.15%, which is considerably less than the increases made by many of its competitors in recent days. The most reasonable two-year fix rate mortgages are priced around 4.5% at the moment, although TSB still seems to have a sub-4.30% two-year fix, which is unlikely to be available for much longer.

NatWest and RBS were offering many of the cheapest five-year fixes, but they are rising, so the bank will have five-year fixes starting from just over 4.60%.

Looking at the mortgage best buy tables, any type of fixed rate priced around 4.5% is generally about as good as you are going to get for now, unless you are quick and get one of the remaining slightly cheaper deals from NatWest, Santander or TSB. 

Moneyfacts data shows that the average mortgage rate has increased by 0.59% since the outbreak of war, and the website’s personal finance expert Rachel Springall described the frantic repricing by lenders as “mortgage mayhem”.

Aaron Strutt, product director at Trinity Financial, says: "The lenders typically use the money markets and swap rates to price their mortgages, and while they have risen significantly, they are starting to stabilise, giving some hope that the scale of price rises may slow down. This is subject to the war in the Middle East ending.

"Swaps have fluctuated so much that some lenders have found it almost impossible to price their mortgages and offer new and existing customers fixed rates. Swap rates did decline on the back of news about peace talks between America and Iran, but this was only temporary because Iran later said there weren’t any peace talks. 

"It is becoming increasingly difficult for borrowers to work out whether they are getting a decent fixed rate and how long they will have to apply for a deal before it is pulled. I suspect the cheapest rates have a shelf life of three or four days at the moment. This is where Trinity's brokers are earning their money and helping our clients to secure the cheapest rates."

Lender Gen H cancels mortgage price hikes

In a highly unusual move, mortgage lender Gen H cancelled its planned fixed rate increases, which were due to come into force at 5.30 pm yesterday.

In its email, it said: “Because of the way our systems and funding work, we are able to move our pricing very fast. And unlike a lot of other lenders, we don’t build big buffers into our rates because we’re always trying to offer your clients the lowest rates we possibly can.

“So when swap rates go up, we have to price up – fast. But equally, when swap rates go down, we can price down just as quickly. Yesterday, Trump signalled he was postponing his attacks on energy sites in Iran and swap rates came down. We realised we could issue this happy U-turn. It’s hard to keep up with all of this volatility – but we think lower rates are better rates, so we didn’t want to waste any time.”

Speak to a Trinity Financial adviser today

The mortgage market moves fast — and the right advice can make a significant difference to the rate and deal you secure. Get in touch with our team to discuss your options.

Call Trinity Financial on 020 7267 9399 to secure a fixed or tracker rate mortgage, book a consultation, or use our appointment calendar

The information contained within was correct at the time of publication but is subject to change.

Your mortgage is secured on your property. Your property may be repossessed if you do not keep up repayments on your mortgage

Halifax and Nationwide have kicked off this week with more fixed rate increases, but which lenders have the lowest mortgage rates?

For the moment, lenders like Barclays, TSB and NatWest have two-year fixed mortgages priced around 4.3%, and HSBC and NatWest have five-year fixes priced around 4.5%.

Halifax has announced it will increase its fixed rates from Tuesday, 24th March, and Nationwide Building Society has raised some of its fixed rates by around 0.3%. Market Harborough Building Society is withdrawing all of its mortgages, and more lenders are also pulling their fixed rates, including Clydesdale Bank.

The latest repricing reflects rising swap rates and higher gilt yields, which lenders use to price fixed mortgages, rather than a sudden change in the Bank of England base rate itself. The uncertainty and ongoing market panic are leading to constant rate rises.

Aaron Strutt, product director at Trinity Financial, says: "The lenders are still raising their fixed rates, but with Donald Trump announcing America and Iran are discussing an end to the war, it has eased some fears in the money markets. Nationwide's new two-year fixed rates will start from 4.5%, and its five-year fixes will start from 4.65%, its first-time buyer rates are more expensive."

"It is hard for borrowers to know which lenders are offering the best rates or whether they are getting a good fixed deal. Many lenders are still giving very little notice before they pull their rates, which makes applying for a mortgage directly with a bank or building society very challenging. This is where our expert mortgage advisers are helping borrowers secure the lowest rates, and they are also available to help new clients."

Why are mortgage rates going up?

The current increases are being driven mainly by market funding costs. Fixed mortgage rates are closely linked to swap rates, which have risen as markets reassessed inflation risks, government borrowing costs and the wider outlook for interest rates. When swap rates move up, lenders often reprice quickly to protect margins. At the moment, some lenders are finding the markets so unstable that they can't even issue mortgages, and this means the shelf life of the cheapest rates is often just a few days. 

What should borrowers do now?

If your current mortgage deal ends in the next few months, it may be sensible to review your options now rather than wait. In a fast-moving market, securing a deal early can give you protection against further increases, and in many cases, a broker can continue to monitor the market in case a better option becomes available before completion. This has become particularly relevant as lenders have already withdrawn products and repriced at very short notice.

Speak to a Trinity Financial adviser today

The mortgage market moves fast — and the right advice can make a significant difference to the rate and deal you secure. Get in touch with our team to discuss your options.

Call Trinity Financial on 020 7267 9399 to secure a fixed or tracker rate mortgage, book a consultation, or use our appointment calendar

The information contained within was correct at the time of publication but is subject to change.

Your mortgage is secured on your property. Your property may be repossessed if you do not keep up repayments on your mortgage

HSBC has announced it is making fixed-rate increases across its range of mortgages for new and existing customers. The bank will almost certainly increase its best deals on Sunday, 22nd March at midnight. There is time to access these rates, but you will need to be quick.

HSBC has not confirmed how much its rates will increase, but it is almost certain that its most competitively priced rates will be withdrawn. It has some of the cheapest fixed rates at the moment, including a two-year fix priced just over 4% and a five-year fix priced just over 4.15%. Borrowers have all day today and until midnight on Sunday to submit their mortgage applications to secure these rates. 

Aaron Strutt, product director at Trinity Financial, says: "Unfortunately, it seems likely that we are going to have another round of fixed rate price hikes, especially with future Bank of England base rate cuts looking well and truly off the table at the moment and the unanimous vote by the Monetary Policy Committee to hold base rate at 3.75%.

"Brokers have been submitting huge numbers of cases to ensure they get their clients the cheapest deals, so the combination of managing lending volumes to maintain processing times, as well as funding cost rises, is leading to the increasing number of rate hikes. More of the smaller and specialist lenders are also pulling their mortgages, often with very little notice, citing unprecedented market conditions."

Coventry for Intermediaries has also announced it is pulling all of its fixed and tracker rate mortgages due to current market conditions. Closures will come into effect from: 8 pm Sunday, 22nd March

Data from Twenty7tec shows 212 mortgage lender updates to its mortgage sourcing system between 9 March and 19 March and 34,380 product changes – but not all will be price increases.

Speak to a Trinity Financial adviser today

The mortgage market moves fast — and the right advice can make a significant difference to the rate and deal you secure. Get in touch with our team to discuss your options.

Call Trinity Financial on 020 7267 9399 to secure a fixed or tracker rate mortgage, book a consultation, or use our appointment calendar

The information contained within was correct at the time of publication but is subject to change.

Your mortgage is secured on your property. Your property may be repossessed if you do not keep up repayments on your mortgage

Mortgage lenders have continued to raise their fixed rates over the last week, with Twenty7tec data reporting nearly 10,000 mortgage product changes in just a few days.

The banks and building societies have announced large price hikes following continued increases in funding costs driven by the war in the Middle East.

The number of sub-4% mortgage deals has significantly reduced, with all the biggest banks, namely Barclays, HSBC, Halifax, NatWest and Santander, having increased rates multiple times since the start of March. 

Are there many cheap mortgage rates left?

Yes. While there have been many rate increases, some competitively priced mortgages are still available. HSBC has a two-year fix at just over 4%, and Santander has a two-year fix at just under 4.2%. The best five-year fixes are priced just over 4.2%. Following further increases in mortgage funding costs, fixed rates may rise again over the coming days.  The chart below, published by MPowered, highlights mortgage funding costs. Banks and building societies add a margin of around 0.5% onto their funding costs. 

With the Bank of England base rate set to stay on hold in March and so many lenders pushing up the prices of their fixed-rate mortgages, it may be a good time for some borrowers to take out a tracker-rate mortgage.  The most competitively priced two-year Bank of England base rate trackers start from 0.19% over the current 3.75% base rate. 

Aaron Strutt, product director at Trinity Financial, says: "Rates are not that expensive, but the war needs to stop soon, otherwise rates could keep going up. The mortgage acceptance criteria is still the same, so there are still income strict mortgages available, and the lenders are still keen to attract borrowers, even if they have been getting much more business than usual, with brokers rushing to secure their clients the best deals. 

"We are still urging our clients to act with more urgency so we can get them decent rates while they are available. More borrowers will be tempted to take trackers as they wait and see what happens to fixes when the situation in the Middle East calms down."

Speak to a Trinity Financial adviser today

The mortgage market moves fast — and the right advice can make a significant difference to the rate and deal you secure. Get in touch with our team to discuss your options.

Call Trinity Financial on 020 7267 9399 to secure a fixed or tracker rate mortgage, book a consultation, or use our appointment calendar

The information contained within was correct at the time of publication but is subject to change.

Your mortgage is secured on your property. Your property may be repossessed if you do not keep up repayments on your mortgage

Getting a mortgage is often more straightforward than many over 50’s think, especially now that so many banks and building societies have eased their maximum age policies and actively try to attract older borrowers.

Just like anyone applying for a mortgage, the lenders will want to see a clear plan for how the mortgage will remain affordable. They will want to know how much you earn, your credit history and your ongoing credit commitments. Depending on the lender and the mortgage term taken, questions about retirement plans and pensions may come up. Having strong PAYE, self-employed or expected pension income, low debts, and a decent deposit can make a big difference.

Higher income multiples and interest-only of the over 50's

It is still possible to get 5.5- and 6-times-salary mortgages if you are an older borrower, and interest-only mortgages to reduce your monthly costs, provided you either earn enough to qualify or have a large enough deposit.  If you do opt for interest-only, the lender will probably accept the sale of your property as a repayment strategy, but you need a plan to repay the mortgage. If you don’t, you could be in for real trouble in 20 years' time when the lender asks for the outstanding balance to be repaid.

Lenders like Clydesdale Bank have a maximum age at the end of the mortgage term of 75 years + 364 days. The minimum mortgage term is five years.  For Interest-only mortgages where downsizing is being used as the repayment vehicle, the maximum age at the end of the mortgage term is the lower of 70 and 364 days or the customer's declared retirement age.

Other lenders like Barclays are pretty generous as the maximum age at the end of the mortgage term cannot exceed the oldest applicant's 80th birthday. Many building societies will lend to people in their 80’s or 90’s providing their have a pension or they can demonstrate how the mortgage will be affordable.

Anthony Emmerson, director of Trinity Financial, says: "Over 50’s have always been concerned when it comes to mortgages, as we get closer to our expected retirement ages lenders are presumed to get more restrictive. This is not now always the case as lenders have become more comfortable with older applicants and have allowed applicants to be assessed to slightly older ages to help facilitate better affordability.

"In the past most lenders have assessed affordability to age 70 max, but now that is being pushing that out to 75 and possibly longer with certain lenders. This allows applicants to repay the debt over a longer time horizon, which makes it more affordable (it also means we are expected to remain in employment longer as well). Some providers are willing to look at your investments and pensions rather than just your income to help with affordability assessments."

More adult children being guarantors for their parents’ mortgages

We are getting more enquiries from adult children who want to be guarantors for their parents’ mortgages, to help them get out of rented accommodation or to pay off an outstanding mortgage balance when their term ends.

Having a clear credit history is important if you want to get a decent mortgage rate from a big lender and not have to pay significantly more through a specialist provider. Keep an eye on your credit report and try not to apply for finance or apply for credit cards or loans in the months or even years before you want to apply for a mortgage.

Speak to a Trinity Financial adviser today

The mortgage market moves fast — and the right advice can make a significant difference to the rate and deal you secure. Get in touch with our team to discuss your options.

Call Trinity Financial on 020 7267 9399 to secure a fixed or tracker rate mortgage, book a consultation, or use our appointment calendar

The information contained within was correct at the time of publication but is subject to change.

Your mortgage is secured on your property. Your property may be repossessed if you do not keep up repayments on your mortgage