With little more than per month to go prior to the UK leaves the EU, has become time to get a cheap deal on a fixed-rate mortgage?
As the time ticks down to the Brexit deadline on 29 March, you might be considering having your finances so as in front of any further upheaval.
But has become the time to stick or twist?
Over recent years months, there has been jitters in the property market, but the truth is that around 100,000 people are still buying homes every month, and many take advantage of cheap home loan rates.
Here, we explain whether Brexit has affected home loan rates, and offer advice on the trends that homebuyers and remortgagers have to know about.
Has Brexit affected home loan rates?
The economic uncertainty of history couple of years hasn’t were built with a profound impact on home loan rates.
Indeed, both two- and five-year fixes are currently less expensive than they were around the time of the EU referendum in spring 2022.
And although both minute rates are now more expensive compared to those seen at the time of the general election in June 2022, this can in-part be explained by two increases staying with you of England base rate.
Are mortgages Brexit-proof?
For all the headlines about possible property market meltdowns, 101,000 people bought a home in January (based on figures from HMRC).
On surface of this, data released last week by UK Finance demonstrated that 370,000 mortgages were granted to first-time buyers last year, the highest number recorded in 12 years.
There’s more choice available for buyers and remortgagers, too.
Figures from Moneyfacts show there are now more fixed-rate mortgages available at maximum loan-to-value (LTV) ratios of 60%, 75%, 85% and 90% than at any point since its records began in July 2007.
Is Brexit changing the mortgage market?
While it’s largely ‘business as usual’ within the mortgage market, there has been changes to borrower sentiment in the last couple of years.
There are signs more individuals have been surfing to fix their mortgage rate for extended, perhaps to prevent the outcome associated with a future rises within the base rate or uncertainty caused by a tumultuous or ‘no deal’ Brexit.
Last month, this change in borrower behaviour saw the space in cost between a two-year and five-year fix drop to 0.41% – the cheapest figure since 2013.
| Jan-Dec 2022 | Jan-Dec 2022 | 28 Jan 2022 | |
| Average two-year fixed-rate | 2.29% | 2.47% | 2.50% |
| Average five-year fixed-rate | 2.86% | 2.91% | 2.91% |
| Difference | 0.57% | 0.44% | 0.41% |
First-time buyer mortgages get cheaper
Another of the most popular trends previously year continues to be lenders shifting focus from lower LTV deals (such as 70% or 75%) to people for buyers with small deposits.
Which? research in November last year, discovered that 95% mortgages had dropped on price at any given time when other products were getting good expensive,
And this trend has continued in 2022. We reported earlier this month that the average rate on the 95% mortgage has came by more than 0.5% within the space of 6 months, currently clocking in at around 3.4%.
Buying a house or remortgaging before Brexit: things to be careful for
95% mortgages and negative equity
95% mortgages are attractively costing the moment, but make sure you do your research.
If prices in the area where you’re buying have increased at unsustainable levels in the last decade, you may be better saving a bigger deposit before jumping in.
This is because a comparatively small drop in house prices could leave you susceptible to negative equity.
Early repayment charges on longer fixes
If you’re thinking of fixing for 5 years or even more, ensure you’re conscious of any early repayment charges (ERCs).
ERCs are often charged as a number of the borrowed funds amount, which decreases each year you have the offer. So, in year one the ERC may be 3-4%, during year four it may be 1% .
The risk of tracker deals
Tracker mortgages (which go up and down in line with the Bank of England base rate) cost rather cheaply right now.
But it’s hard to say whether the base rate will continue to increase – particularly in a time period of economic uncertainty – and when it will, the lowest rates will lose some of their shine.
Flexibility to fix
Nobody knows what’s going to take place with Brexit, so you may be tempted to stay on your toes rather than choosing long-term rate security.
If you choose a two-year fix, you are able to arrange your next mortgage six months ahead of time (after 1 . 5 years) – so it’s worth taking into consideration this option if you’re considering moving or don’t want to tie yourself down.
Lowest pre-Brexit mortgage rates
The tables below show the least expensive introductory rates currently available on deals at 60%, 75%, 80% and 90% LTV across three popular deal types – two-year fixes, five-year fixes and two-year trackers.
Two-year fix
| Max LTV | Lender | Initial rate | Revert rate | APRC | Fees |
| 60% | Halifax* | 1.40% | 4.24% | 3.8% | lb1,495 |
| 75% | Atom Bank** | 1.44% | 4% | 3.7% | lb1,200 |
| 80% | Nottingham | 1.52% | 5.74% | 5% | lb999 |
| 90% | Barclays*** | 1.79% | 4.24% (3.49% + base rate) |
3.9% | lb999 |
*minimum loan of lb250,000 **minimum loan of 350,000 ***maximum loan of 400,000
Five-year fix
| Max LTV | Lender | Initial rate | Revert rate | APRC | Fees |
| 60% | Halifax* | 1.80% | 4.24% | 3.3% | lb1,495 |
| 75% | Halifax* | 1.90% | 4.24% | 3.5% | lb1,495 |
| 80% | Halifax* | 1.98% | 4.24% | 3.6% | lb1,495 |
| 90% | Atom Bank** | 2.24% | 4% | 3.4% | lb1,200 |
*minimum loan of 200,000 **minimum loan of lb350,000
Two-year tracker
| Max LTV | Lender | Initial rate | Revert rate | APRC | Fees |
| 60% | Halifax | 1.34% (base rate + 0.59%) | 4.24% | 3.8% | lb999 |
| 75% | Leeds | 1.38% (base rate + 0.63%) | 4.69% (5.69% – base rate) |
4.8% | lb999 |
| 80% | Halifax | 1.48% (base rate + 0.73%) | 4.24% | 3.8% | lb999 |
| 90% | Accord Mortgages* | 1.99% (base rate + 1.24%) | 4.25% (4.99% – base rate) |
4.4% | lb995 |
*maximum loan of lb500,000
Source: Moneyfacts, 21 January 2022. Repayment mortgages only.
