Here’s the latest mortgage info from Trinity Financial’s Aaron Strutt.
The mortgage pricing merry-go-round has continued over the last few weeks with banks and building societies raising the cost of their fixed and tracker-rate deals. The mortgage price hikes resumed after a prolonged period of the lenders making fixed rate pricing improvements, but when the bombing in Iran started again and problems intensified in the Strait of Hormuz borrowing costs went up.
Santander recently repriced its mortgage range twice in six days, while Barclays also increased selected rates twice in eight days. Halifax, HSBC and TSB have also made numerous changes as higher wholesale funding costs continue to put pressure on mortgage pricing.
Despite the recent increases, Trinity Financial’s brokers still have access to competitive two and five-year fixed-rate mortgages starting from around 4.6% and tracker rates from 3.99%, although rates depend on the size of the borrower’s deposit, income, loan size required and their overall financial circumstances.
Lloyds Banking Group has started to push its cheap mortgages available to new and existing Lloyds Premier current account holders earning £100,000 or more as part of the announcement that the Halifax brand is going to be retired after 173 years. As an incentive to open their current account, the bank typically issues rates 0.2% lower than the standard Halifax mortgages, meaning higher earners can often get access to the best mortgage rates in the market and they currently start from just over 4.4%. HSBC and Barclays are also offering mortgage and current account incentives for higher earners which include income stretches, lower fixed rates and cheaper arrangement fees.
There may be some more positive mortgage rate news on the way with Nationwide just announcing it is lowering some fixed rates by nearly 0.2%. On Friday afternoon, the lender Gen H sent a message to brokers saying that after last week’s swap rate spike, things have “turned right round”, meaning the lender could lower rates by up to 0.4%.
Bank of England holds the base rate at 3.75% again
The Bank of England’s Monetary Policy Committee voted to keep the base rate at 3.75% on the 30th July 2026 for the fifth month in a row. Six committee members voted to hold the rate, while three preferred an increase which indicates we are edging closer to a base rate rise, but it is unlikely to happen at the next meeting in the middle of September.
Although the base rate was left unchanged, this does not necessarily mean mortgage rates will remain stable. Fixed mortgage pricing is influenced heavily by financial-market expectations, swap rates and lenders’ own funding costs. The Bank of England has warned that higher energy prices could create additional inflationary pressure and that a rate rise may be required to bring the current 2.6% inflation rate closer to the 2% target.
Andrew Bailey, governor of the Bank of England, told the BBC: "If we get a continuation of this conflict going on and oil prices stay above $100 a barrel... the odds are that interest rates will have to go up higher." But he also said if a ceasefire and a memorandum of understanding are established – and stick – that would make a difference.
Should you secure a mortgage rate now?
Borrowers purchasing a property, approaching the end of a fixed-rate deal or considering a remortgage may well benefit from reviewing their financial options sooner rather than later given the number of mortgage rate changes now. Many lenders allow borrowers to reserve a new mortgage several months before their existing deal expires, and homebuyers can also apply for and book a mortgage rate through lenders like Nationwide for Intermediaries while they progress with their home purchase plans.
Tracker mortgages looking more attractive
Tracker mortgages have become increasingly popular among borrowers looking for an alternative to the more expensive fixed-rate deals.
Halifax recently increased its lowest tracker rate, which had been priced at 0.21% above the Bank of England base rate. With the base rate at 3.75%, the initial mortgage rate had been 3.96%. But Barclays currently offers one of the lowest-priced two-year tracker mortgages, with an initial rate of 3.99% for eligible Premier customers. The deal is available on mortgages of up to £2 million for borrowers with at least a 40% deposit or equivalent equity.
Santander, HSBC, Halifax and Nationwide also have tracker deals priced close to 4%, although fees, loan-to-value limits and eligibility requirements vary.
Unlike fixed-rate mortgages, tracker rates can rise or fall because they are normally linked to the Bank of England base rate. This means monthly repayments could increase if the Bank raises rates.
Some tracker mortgages have no early repayment charges, potentially giving borrowers the flexibility to move onto a fixed deal later. However, borrowers should check the conditions carefully, as not every tracker offers this flexibility.
How much can you borrow based on your salary?
In 2014, the business secretary of the time, Vince Cable, said he was appalled that some mortgage providers were lending five times a mortgage applicant's income, suggesting a stable level was up to 3.5 times. Back then I was quoted on the BBC saying "Until house prices come down, buyers will need more generous income multiples otherwise they will be forced to rent for longer or rely on the Bank of Mum and Dad."
Nationwide Building Society has just eased its higher loan-to-income criteria for some borrowers in a move Vince Cable would not approve of. Eligible sole and joint applicants with a combined qualifying income of at least £75,000 may now be able to borrow up to six times their income, subject to affordability checks, credit status and the lender’s wider criteria. Nationwide previously required joint applicants to have a combined income of at least £100,000.
For example, applicants with a combined income of £75,000 could potentially qualify for a mortgage of up to £450,000. This is not guaranteed, as commitments such as loans, credit cards, childcare costs and other regular expenditure will affect the final amount available.
Other lenders also offer enhanced income multiples for certain professions, higher earners and first-time buyers. Speaking to a broker can help applicants understand which lender is likely to provide the most suitable combination of affordability, rate and criteria.
Can first-time buyers purchase a home with a 2% deposit?
More banks and building societies are offering 2% deposit mortgages as competition to attract first-time buyers intensifies.
Saving a traditional 5% or 10% deposit remains one of the biggest obstacles facing many people who want to buy their first home. High rents, living costs and property prices can make it difficult to build a sizeable deposit, even for applicants with good salaries and a strong record of managing their finances.
Mortgage lenders are responding by launching products that allow eligible first-time buyers to purchase with a deposit of just 1% or 2%. There are also mortgages requiring a fixed cash deposit of £5,000 or £10,000, alongside several no-deposit options. Santander, Leeds Building Society, Halifax, Newcastle Building Society, The Cambridge Building Society and Aldermore are among the lenders offering, or introducing, mortgages designed for buyers with very small deposits.
These products could help more renters and first-time buyers discover that buying a property may be closer than they think.
