Looking for the best mortgage rates in June 2020? England is in the process of exiting lockdown, with house moves, viewings, and evaluations once again permitted. This is not to say that things are back to normal, quite: buying a house and getting a mortgage are very different experiences this year compared to last summer.
The single most significant change you need to be aware of as a prospective buyer is that most lenders are currently only approving mortgages with deposits of 15 per cent or higher. It is a temporary measure, but it remains to be seen when higher loan-to-ratio mortgage will come back.
Having said that, now is the perfect time to familiarise yourself with the language of mortgage rates, so that you know how to secure the best mortgage for your needs.
Whether you are about to take out your first mortgage, remortgage your current home, or just want to see if you could secure a better rate, use the online mortgage calculator form below to compare mortgages from top lenders. You can also search for buy to let mortgages if you're planning to buy a house to let out.
Habito will engage in an online chat with you, advising you on the next stages, helping you assess affordability and give you impartial advice to ensure you get the best deal for you. Use their mortgage comparison calculator below to find the best mortgage for you.
Please note: Habito is an online mortgage broker and whole of market lender so they will assess the best deals available and work out which works for you. We have an affiliate relation with Habito and take a small percentage of commission for referring you to them.
Mortgage rates after coronavirus: what should you expect?
Mortgage rates after the coronavirus lockdown is over are likely to remain low, with lenders having to keep up with the all-time low base interest rate. Whether you choose and fixed or variable rate mortgage, it's highly unlikely mortgage rates will increase any time soon. Our advice is: focus on putting together as large a deposit as you can manage, and don't be afraid of negotiating for a fair house prices. Then, you have nothing to worry about mortgage-wise.
Mortgage and coronavirus: is it harder to get a mortgage now?
In a sense, yes, because lenders are now expecting a 15 per cent deposit as standard – a significant rise from the five-per-cent deposit required pre-coronavirus. It is also likely that lenders will want to know more about your financial circumstances for the next year before they lend. It's important to stress that this doesn't mean that everyone will find it difficult to get approved for a mortgage – after all, lenders still need mortgage applicants, even if they do grill you more on your finances.
Also bear in mind that this does not apply if you're remortgaging, and you will be able to get a remortgage deal with a higher LTV (Loan to Value Ratio). And if you are a first-time buyer and can't put together a higher deposit, don't worry too much: this is a temporary measure and by no means a permanent change. It's still worth your while researching mortgage rates and how to get the best one.
Mortgages and coronavirus: what is the impact?
The truth is that we still don't know what impact the coronavirus outbreak will have on the property market, or on mortgage rates. The base interest rate has already been cut very low to try and mitigate the economic impact of the pandemic, and it remains to be seen what further financial measures will come into place a few months down the line.
It is likely that house prices will fall throughout 2020 before picking up again in 2021. From a buyer's perspective, this makes 2020 a good year to look for a home and secure a good mortgage rate on a house that will likely cost a bit less than it would have in 2019. Be quick, though: the 'coronavirus effect' isn't set to last long.
What is the best time of year to get a mortgage?
Ordinarily, we would say that the very best time to get a mortgage is the end of a season, just before the next year's spring rush of home buying begins. So, the months of November and December are a pretty good time to secure a mortgage, because they also tend to be a good time to buy a house at a great price.
Late winter (January and February) also present a good opportunity to finalise your purchase and get a mortgage, because the market is still a bit sluggish, but there are more properties on the market than before Christmas.
The summer months tend to be much, much busier, with family homes in particularly high demand. That is, they are under normal circumstances. This year, there is no way to predict for certain when the property market and mortgage market will emerge from lockdown conditions. We are unlikely to see a very busy summer, although properties will still be available: good news if you were hoping to buy a home later in 2020.
Finding the best mortgage rates: the importance of the deposit
If there is just one useful thing to know when looking for a mortage, it is this: the bigger your deposit, the better the deal you'll get. This is true always, with any lender. The very best mortgage rates are only available to buyers with deposits of over 25 to 30 per cent (and 40 will get you the cream of the crop of mortgage deals). We strongly recommend trying to save up for a slightly bigger deposit, even 15 per cent rather than 10, before applying for a mortgage. Remember: the smaller your loan, the better the rate. If you only have a small amount saved up and really want to own a home soon, consider government equity loan schemes such as Help to Buy.
How to find the best remortgage rates
The answer is: start looking as far in advance of switching lenders as you can, and keep a lookout. Remortgaging only ever makes sense if it's going to be financially beneficial; for example, if your current lender is going to charge you an exit fee, you'll want to make sure that your new repayment plan is worth that penalty. Conversely, if you see a great fixed-term deal that'll allow to start saving (for example), exit fees notwithstanding, go for it.
Finding the best holiday let mortgage
With the staycation trend booming, you might be thinking about taking out a holiday let mortgage. Finding the best mortgage rates for this type of mortgage is very important, because these type of mortgage require bigger deposits and usually come with higher interest rates. They can be worth it if your holiday let makes a decent return, but you'll want to make sure you're on the best possible rate to maximise the property's potential.
How to find the best mortgage rate if you're self-employed
Accessing the best mortgage rates if you're self employed will hinge on three things: how much you have saved for a deposit, your earnings, and your record keeping. Needless to say, all three need to be up to scratch, and the more you have on all three fronts, the more likely you are to get a good deal on your mortgage. Mortgage lenders dislike applications they deem to be high risk, and you want to convince them that, even though you are self employed, you're financially stable.
Find out more about self-employed mortgages in our guide.
How to find the best guarantor mortgage
Guarantor mortgages are the new crop of what used to be called 100 per cent mortgages, and they do allow you to get a mortgage without a deposit – if you have family who are able and willing to keep some of their savings in an ISA account for a few years. The differences between the different products available are mainly about the interest rates on the savings and the number of years the money will need to be used as the guarantee on your mortgage. Find our more in our guide to guarantor mortgages.
Is a fixed-term mortgage always the best rate?
Fixed-term mortgages are very, very popular right now, and with good reason: they allow you to fix your interest rate for one, two, or five years, and in some cases even longer. But is this type of deal always the best one? The answer depends mainly on what your plans are for the near future: if your first house purchase is not the home you're planning on staying in for a long time, be careful with long fixed-term mortgage deals, as they almost always come with a financial penalty for an early exit.
Average mortgage interest rate: what it can tell you
Average rates won't tell you what the best mortgage rate is for you personally, under your current circumstances. But, they do give you a good idea of the average value for money for different length fixed-term mortgages, compared to variable rate mortgages.
Of course, this method of mortgage comparison only really works if there are no drastic changes to the base interest rate from the Bank of England. However, given that the base interest rate levels have remained relatively stagnant (and very low) for a good number of few years now, comparing average mortgage interest rates may well give you a clue to what type of mortgage you should be going after.
The average mortgage rate chart for the time period between 2014 and 2019 shows a clear downward trajectory, with interest rates steadily falling over the five years.
If a longer-term fixed rate mortgage is what you're after, now is definitely the time to get one: the 10-year fixed mortgage in particular is a much, much more attractive proposition as of September 2019 at an average of 2.65 per cent than it was in September 2014 at 4.06 per cent.
However, if you want the hands-down best mortgage rate, there is some competition between the two-year fixed rate mortgage (average rate of just 1.56 per cent in September 2019) and the two-year standard variable mortgage. It wasn't as good a deal last September as the two-year fixed rate, at 1.61 per cent. But, back in September 2016, a standard variable mortgage came in at 1.54 per cent – cheaper than the two-year fixed average of 1.59 per cent. In fact, it wasn't until the very end of 2016 that the standard two-year variable became more expensive, on average, than a two-year fixed rate.
The main takeaway from this is that, right now, a two-year fixed rate mortgage is your best bet as far as average mortgage rates go, very closely followed by the two-year variable rate that remains low thanks to the lowest ever current base rate.
- Read more about online mortgage brokers in our guide