Best UK mortgage deals of the week, 1 November

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Under 4%-deals hitting the market were expected to spark another mortgage war among big lenders but mortgage brokers warn that actually, more rises are on the way.

The average rate on a two-year fixed deal came in at 5.09%, unchanged from than last week, while average rates for a five-year deal came in at 4.85%, lower than the previous 4.95%, according to figures from Uswitch.

The Bank of England has kept interest rates at 5% but investors predict two cuts will happen before the end of the year, with the first expected to take place in November.

Inflation has also dropped below 2% in September, coming in at 1.7%, in good news for mortgage holders.

However, homeowners are facing a challenging financial outlook as the budget statement by chancellor Rachel Reeves signalled further strain on mortgage holders.

The Office for Budget Responsibility (OBR) has projected that the average mortgage rate is set to climb from 3.7% in 2024 to 4.5% by 2027. Meanwhile, house prices are anticipated to escalate, reaching an average of £310,000 by 2028.

For prospective buyers, the financial burden continues to pile on. A typical mortgage for a home valued at £290,000, with a 10% deposit and an interest rate of 3.7%, would result in monthly repayments of approximately £1,334.

In contrast, a 25-year mortgage on a property priced at £310,000, assuming the same deposit but with an interest rate of 4.5%, would see monthly payments rise to £1,550—an increase of £216.

Despite the difficulties of jumping on the housing ladder, changes to stamp duty by Reeves in the budget are expected to spark a rush of UK property transactions in the new year until the end of March, according to Nationwide.

HSBC mortgage rates

HSBC (HSBA.L) has a 3.89%% rate for a five-year deal. This is unchanged from the previous week and for those that have a Premier Standard account with the lender this rate comes in at 3.86%.

Looking at the two-year options, the lowest rate comes in at 4.19% with a £999 fee, which is also unchanged.

Both cases assume a 60% LTV mortgage, meaning buyers need to have at least 40% for a deposit.

HSBC offers 95% LTV deals, meaning you only need to save for a 5% deposit. The rates are much higher, however, with a two-year fix coming in at 5.59% or 5.09% for a five-year fix.

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This is because the rate someone can get will be determined by their financial situation and the size of their deposit. The larger the deposit, the lower the LTV, allowing buyers to access better deals because lenders consider them less risky.