Low-rate mortgage deals are disappearing: how can you land the right deal?

For aspiring homeowners, cheaper mortgages are becoming increasingly scarce. Why is this happening? And how can you still land a good deal?

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Aspiring homeowners looking for low-rate mortgage deals are starting to realise that cheaper mortgages are becoming increasingly scarce. So, why is this happening? And how can you still land a good deal?


Why are low-rate mortgage deals disappearing?

It’s simple. The base rate impacts mortgage rates because an increase in the base rate translates to a rise in mortgage rates. Likewise, a decrease in the base rate translates to a reduction in mortgage rates.

If the Bank of England’s Monetary Policy Committee (MPC) votes to increase the base rate, it becomes more expensive for lenders to borrow money. In turn, lenders raise their rates to ensure they are still making profits, making loans more expensive for borrowers.

Why are low-rate mortgage deals disappearing? Well, the Bank of England’s Monetary Policy Committee (MPC) voted to increase the base rate to 0.5% at their last meeting. This translates to an increase in borrowing rates, meaning borrowers are faced with higher mortgage rates from lenders.

In fact, most lenders have already started pulling their low-rate mortgage deals from the market, with the cheapest two-year fixed-rate mortgage deals now priced above 1.4%. Likewise, the cheapest five-year fixed-rate mortgage deals are now priced above 1.59% when borrowing at 60% loan-to-value. It’s also currently difficult to come across sub-1% mortgages.


How can you land the cheapest mortgage deal?

1. Evaluate yourself

The first step to landing the cheapest mortgage deal is to evaluate yourself, assuming you’ve already set your sights on a particular property. You can use our mortgage calculator and debt-to-income ratio calculator to help you do this.

These tools will help you see if you can afford a mortgage in your current financial situation, keeping in mind that the best time to buy a home is always when your finances allow you to do so.

2. Compare deals from different lenders

There are so many mortgages on the market that working out the best one for you can be tricky and time-consuming. In fact, you may even find that a mortgage with a lower rate might look cheaper, but once you crunch the numbers, it’s more expensive than another with a higher rate.

So what should you be looking for to ensure you find the cheapest deal? It’s important to consider the full cost of the mortgage, not just the interest rate. This includes the initial and reversion rate, the upfront fee if there’s one, the deposit you’ll need and the cost of home insurance.

It’s not uncommon for some buyers to encounter difficulty when comparing deals. If you’re unsure, it’s always wise to seek the assistance of a mortgage adviser. And if this is your first purchase, it’s wise to check out our free mortgage resource to help you learn more about mortgages.

3. Take advantage of government incentives

Currently, there are a number of government schemes to help you get on the property ladder. There are schemes that offer discounts, help you save for a mortgage deposit or reduce the interest on borrowed money. You just have to find the scheme that best matches your needs.

4. Save money on your mortgage

Once you’ve secured your mortgage, it’s prudent to find ways to save money, especially on monthly payments. However, note that you can easily breach your mortgage agreement when doing some things, so read it carefully. Some things you can do to save money on your mortgage include:

  • Subletting a room
  • Overpaying on your mortgage
  • Renting out your driveway

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

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