Which UK lenders are offering best mortgage rates?

Highlights

  • Lenders to increase mortgage rates amid expectations of rising interest rates.
  • Bank of England is expected to raise the interest rate from the historic low of 0.1% to 1% by next summer.
  • Unlike mortgages on fixed rates, variable deals or trackers will be impacted immediately by an interest rate hike.

Ahead of the interest rake hike expected by the Bank of England to curb the rising inflation, banks are putting their cheap mortgage deals off the table, leading to increasing costs for home buyers. The cost of home loans is bound to rise as lenders will come up with costly offerings. Thus, now is the right time to get the cheapest mortgage deals as the Bank of England (BoE) is expected to raise the interest rate from the historic low of 0.1% to 1% by next summer.

If the interest rates rise, the annual cost of mortgages will rise by around £14 billion, which will further add to the economic slowdown due to the current supply chain disruptions. Of the UK’s total mortgage worth £1.6 trillion, around one-third on variable deals or trackers will be impacted immediately, while the other two-third mortgages on fixed rates won’t be affected right away.

Banks are already in action behind closed doors after being signalled by BoE’s stand to counter inflation by raising interest rates. Some fixed rate deals have already been revamped by Barclays. Lloyds and Nationwide Building Society are also adjusting their mortgage pricing. Lenders are moving one step ahead of BoE’s announcement on rates. However, as lenders prepare to raise mortgage rates, households prepare to face the brunt of rising inflation, further squeezing their disposable income ahead of a rough winter.

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Let’s take a look at some of the mortgage lenders offering best rates to households.

Nationwide Building Society (LON: NBS)

It is the largest building society in the world. The current mortgage rate is 0.87%. The LSE-listed company has given a return of 15.29% in 1 year. Its current market cap stands at £2,005.55 million. The previous close price of Nationwide Building Society’s shares was GBX 190.00 as of 21 October 2021.

Barclays PLC (LON: BARC)

London-headquartered multinational bank Barclays PLC is listed on the London Stock Exchange. The current mortgage rate is 0.91%. Its current market capitalisation stands at £33,408.72 million and it has given a return of 91.69% in 1 year. The previous close price of Barclays PLC’s shares was GBX 196.90 as of 21 October 2021.

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Natwest Group PLC (LON: NWG)

LSE-listed banking and insurance holding company Natwest Group PLC’s current market capitalisation stands at £26,555.06 million and it has given a return of 96.47% in 1 year. The current mortgage rate is 0.10 %. The previous close price of Natwest Group PLC’s shares was GBX 228.50 as of 21 October 2021.

HSBC Holdings plc (LON: HSBA)

LSE-listed HSBC Holdings plc is a constituent of the FTSE 100 index. The current mortgage rate is 6.45%. Its current market cap stands at £88,508.31 million and it has given a return of 43.77% in 1 year. Its average dividend per share stands at GBP 0.17 and its 5-year average dividend yield is 4.5%. The previous close price of HSBC Holdings plc’s shares was GBX 434.75 as of 21 October 2021.

Lloyds Banking Group PLC (LON: LLOY)

Lloyds Banking Group PLC’s current market cap of the FTSE100-listed company stands at £34,823.36 million, and it has given a return of 77.88% in 1 year. The current mortgage rate is 4.44%. The previous close price of Lloyds Banking Group PLC’s shares was GBX 48.32 as of 21 October 2021.

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