London-based mortgage brokers with a track record of providing expert mortgage advice

The Bank of England has held interest rates at 4%, in a widely expected move. The decision is taken by the nine members of the Bank's Monetary Policy Committee - four voted for a cut, but five voted to hold.

Sarah Breeden, Swati Dhingra, Dave Ramsden and Alan Taylor are the four members who voted to reduce bank rate by 0.25% to 3.75%. The bank rate was held at 4% in September after being cut from 4.25% to 4% in the August meeting. 

This means borrowers could get an early Christmas present if the Bank decides to cut rates on 18 December. In general, the bank cuts the rate when it wants to increase spending by consumers and businesses, and raises it when it wants to control inflation. Although with an upcoming Budget and struggling economy there are significant pressures to lower the base rate again.

Inflation was 3.8% in September - well above the Bank's 2% target - but the Bank is confident that it has peaked. The economic news coming out of the UK is not particularly good at the moment, especially with the negative tones coming from the Chancellor during her last press conference. As a result, this means that the Bank of England may well be forced to cut the base rate a few times.

Aaron Strutt, product director at Trinity Financial, says: "I suspect the Bank of England Monetary Policy Committee will lower the base rate next month as we've seen them do in the past - just before Christmas.

"Mortgage rates have been coming down over the last few weeks and rates are much more competitively priced than they were. Nationwide has just launched a sub 3.65% two-year fixed rate, which is the cheapest residential fixed rate since 2022. This is great news for borrowers, especially as there are so many homeowners coming up to remortgage over the next year."

The BBC reports Andrew Bailey (pictured above), Governor of the Bank of England, says the Bank's forecasts suggest inflation "will fall to close to 3% early next year, and then decline towards the 2% target after that".

Get expert mortgage advice from Trinity Financial

At Trinity Financial, our team of experienced London mortgage brokers specialises in helping borrowers secure the right deal. We work with all major lenders and can guide you through the full application process.

Call Trinity Financial on 0808 1642174 to secure a mortgage or book a consultation

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

Nationwide is the latest lender to make big changes to its mortgage rates and it is now offering a 3.64% fix which is the lowest residential two-year fix available since 2022.

Many of the major lenders have cut rates for borrowers with all different deposit sizes over the past two weeks, including a host of high street banks.

The sudden competition between lenders is partly in response to market interest rate expectations, with the Bank of England now considered more likely than not to cut interest rates again before the end of the year. Mortgage funding costs have been getting lower and the lenders are keen to attract borrowers.

Thisismoney.co.uk reports the last time there was a widely available two-year fix that was lower than 3.64% was in September 2022, according to Moneyfacts, when rates shot up after the Liz Truss-Kwasi Kwarteng mini-Budget, with its wave of unfunded tax cuts unsettling bond markets.

What are the details of the new 3.64% Nationwide rate?

Nationwide’s most competitive rate is 3.64%, and it is available for homebuyers to borrow between £300,000 and £5 million. There is a £1,499 arrangement fee, and applicants must make a 40% deposit to qualify. The lender has a sub 3.85% five-year fix has the same minimum and maximum loan sizes and the same arrangement fee.

Aaron Strutt, product director at Trinity Financial, says: "Hopefully some of the other lenders will lower their rates again so they will come down a bit more. Nationwide often has the cheapest rates and it is always keen to top the best buy tables."

Representative example: A Nationwide capital and interest mortgage of £400,000 payable over 30 years, initially on a fixed rate basis at 3.64% for 24 months and then on the lender's 6.24% standard variable rate for the remaining 28 years. The 3.64% rate would require 24 monthly repayments of £1,834.50 followed by 336 payments of £2,558.79. The total amount repayable would be £903,781.44 made up of the loan amount, plus interest (£502,266.77) and £1,499 (product fee), £80 (final repayment charge), £25 (completion fee). The overall cost for comparison is 6.4% APRC representative.

Get expert mortgage advice from Trinity Financial

At Trinity Financial, our team of experienced London mortgage brokers specialises in helping borrowers secure the right deal. We work with all major lenders and can guide you through the full application process.

Call Trinity Financial on 0808 1642174 to secure a first-time buyer mortgage or book a consultation

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

HSBC mortgages has started to offer up to 6.5 times salary income multiples to HSBC UK Premier account customers. 

Where an application is 90% loan-to-value or less, so the borrower has at least a 10% deposit, HSBC will apply a loan-to-income of 6.5x single or joint incomes, subject to an affordability assessment.

Please note, in order to qualify for the higher loan-to-income at least one applicant must hold a Premier account at the point of submission. This is something Trinity's brokers can do for customers, providing they meet the premier account requirements.

UK Premier Account Eligibility:

• Annual income of at least £100,000 paid into the HSBC Premier account or
• Savings or investments of at least £100,000 with HSBC in the UK or
• International Premier status, already a Premier customer elsewhere

Will borrowers need to opt for a two- or five-year fix for HSBC's 6.5x salary mortgages?

HSBC has also enhanced its affordability calculator to allow us to select a Premier customer and access the new loan-to-income multiples. The mortgage affordability calculator will now show two maximum loan amounts based on whether a rate of less than five years or five years or greater is selected, providing additional options for customers’ borrowing needs.

Aaron Strutt, product director at Trinity Financial, says: “HSBC has gone from being one of the more conservative lenders to offering up to 6.5 times salary to higher earners. This policy change means they are more generous than virtually all of the other banks and building societies.

"We know the lenders are keen for business but this income stretch mortgage is punchy to say the least and borrowers will really need to think carefully before they take on such a big income multiple.

"Applicants will probably need to lock in for five years to get the highest loan amount, so this does provide a bit more payment security. I am pretty sure this change will get HSBC a lot more business, especially as many applicants only need slightly more generous loan sizes to buy the properties they want. Affordability is clearly a huge issue in the mortgage and property markets and HSBC is trying to address this."

A few months ago HSBC increased its loan-to-income (LTI) ratio for first-time buyers. The lender is now offering first-time buyers LTI multiples of up to 5.5 times their salary on mortgages. Sole applicants earning at least £35,000 and joint applicants with a combined income of £55,000 or more will be eligible for enhanced borrowing.

Other lenders offering up six times salary mortgages but their rates are unlikely to be as well priced as HSBC's. Check out our blog on how many lenders offer 6 times salary mortgages.

Get expert mortgage advice from Trinity Financial

At Trinity Financial, our team of experienced London mortgage brokers specialises in helping borrowers secure the right deal. We work with all major lenders and can guide you through the full application process.

Call Trinity Financial on 0808 1642174 to secure a first-time buyer mortgage or book a consultation

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

• Nationwide's substantial enhancement of Interest Only offering, includes increasing the maximum loan-to-value for part and part to 85%
• Expanding range of repayment plans accepted, including use of savings, investments and pension funds
• Interest Only mortgage borrowing now also available for first-time buyers

Nationwide has enhanced its Interest Only mortgage offering as it aims to give homeowners more flexibility.

Interest Only lending will be extended to all buyer types up to 75 per cent Loan-to-Value (LTV) or up to 85 per cent if it’s a part interest only, part capital repayment application.

Nationwide's Interest Only repayment vehicles:

Nationwide is also expanding repayment options beyond the existing sale of main residence, to include UK-based savings, investments, pension funds and other properties.

Applicants need a minimum eligible income of £75,000 for sole applications and £100,000 for joint cases, unless one applicant earns at least £75,000. The maximum loan amount available through Interest Only is £5 million, with the maximum term increased to 40 years (or retirement, if sooner), from the current 25 years.

Nationwide's Interest Only now available to first-time buyers:

The Interest Only range, which is currently only available through brokers, will also become open to first-time buyers. Nationwide re-entered the residential Interest Only market in 2020 and has been supporting those wanting to move home or remortgage via intermediaries.

Aaron Strutt, product director at Trinity Financial, says: "The lenders have been slowly easing their interest-only mortgage rules for a while, and they have been easing their mortgage affordability rules." 

Does it make sense to take a Nationwide Interest Only mortgage? 

Interest-only is a great option to lower monthly costs, but it makes sense to have a plan in place to work out how to repay the debt at the end of the term. There are lots of lenders offering interest-only now, it often makes sense to take part of the mortgage on interest only and a chunk of it on capital repayment."

Get expert mortgage advice from Trinity Financial

At Trinity Financial, our team of experienced London mortgage brokers specialises in helping borrowers secure the right deal. We work with all major lenders and can guide you through the full application process.

Call Trinity Financial on 0808 1642174 to secure a first-time buyer mortgage or book a consultation

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

While lower deposit mortgages dominate first-time buyer demand a significant minority are seeking 40% deposit deals.

Data from Moneyfactscompare.co.uk shows almost one in three (31%) first-time buyers are opting for 10% deposit mortgages, and a further 10% are looking at 5% deposit options. This hints at many first-time buyers relying on 5-10% deposits. This translates to £13,650 to £27,300 at the average UK house price of £272,995 [source].

Almost one in five (17%) of first-time buyers are often seeking the most competitively priced mortgages when they have more than a 40% deposit. For context, a 40% deposit on the average UK house price would require a deposit of around £110,000, highlighting that there is a distinct group of first-time buyers in a favourable financial position.

Monyefacts says borrowers with smaller deposits, or those who have accumulated less equity, could be paying £134 more per month more compared to those with a larger deposit or equity to borrow the same amount.

Homeowners with around 25% equity are more likely to make their next move on the housing ladder, with this threshold potentially acting as a key financial or psychological milestone before progressing to a new property.

Aaron Strutt, product director at Trinity Financial, says: "We speak to first-time buyers in all different financial situations, some of them have a larger deposit either from savings or that has been gifted to them. Others need an income stretch to get a mortgage with a smaller deposit.

"Thankfully, there are low deposit mortgages available, so buyers do not need a huge deposit any more. There are no-deposit mortgages, a 2% deposit deal, and £5k deposit deals. Plus many 5% deposit options."

Mortgage lenders offer their lowest rates to borrowers with clean credit histories, a track record of income, plus a 35% to 40% deposit. Rates are not much more expensive for those with 25%, 20% or even 15% deposits. They get more expensive with 10% and 5% deposits. 

Source: Moneyfactscompare figures based on mortgage searches on their website over a month

Call Trinity Financial on 0808 1642174 to secure a mortgage, submit a questionnaire or book a consultation 

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  

Two and three-year fixed-rate mortgages are still more competitively priced than virtually all of the lowest five-year fixes, as many borrowers continue to opt for short-term fixed rates.

Mortgage lenders including Barclays, HSBC, Halifax, Santander and NatWest, have all lowered their rates in recent days in a positive move by the banks to attract more borrowers in the run-up to Christmas. Their five-year fixes are no longer as competitively priced, so there are fewer sub-4% five-year fixes available.

NatWest, Santander, Barclays and Halifax offer a selection of the lowest two-year fixes from around 3.75%, while Santander, TSB and Halifax offer three-year fixed rates from 3.8%.

When is the next Bank of England base rate cut expected?

UK headline inflation unexpectedly held steady at 3.8%, with policymakers hoping we are at the peak, and prompting traders to increase bets on a rate cut by year-end.

According to the latest market update from Arbuthnot Latham private bank, markets are now pricing in a 70% probability of a December cut, followed by at least one further cut early next year, potentially taking the base rate to below 3.5%.

No change is expected at the November meeting, but markets will be keenly focused on the vote split and the Bank’s updated economic projections.

Why are borrowers still taking five-year fixes if two-year deals are cheaper?

Many homeowners and particularly first-time buyers, want the longer-term payment security and would rather avoid a two-year fix. Another big reason is that mortgage lenders use more generous affordability calculations, so first-time buyers, next-time buyers, and remortgaging customers can borrow more when they take a five- or even a ten-year fix.

What will happen to fixed rates if the base rate is lowered?

There is a chance that the fixed rates will get cheaper, but probably not by much. The Bank of England base rate and mortgage funding costs will need to come down a few more times before fixed rates get noticeably cheaper.

Call Trinity Financial on 0808 1642174 to secure a  mortgage or book a consultation

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