The Bank of England raised interest rates in March from 4% to 4.25%. The 0.25 percentage point increase marks the 11th rise since December 2021 when Bank rate stood at just 0.1%. It puts Bank rate at its highest level since 2008 and has applied further upward pressure on the cost of borrowing.

The next Bank rate decision will be taken on 11 May 2023.

Volatility and uncertainty

Mortgage rates have been settling since costs rocketed after last September’s mini-Budget which triggered market uncertainty. and sent the pound crashing to historic lows. Major lenders including NatWest, Barclays, Halifax and Virgin Money all pulled deals and brought them back to the market at higher prices.

Mortgages costs have been continuing to come down from their peak, potentially settling at around their current levels.

Average and best costs of popular deals

According to our mortgage partner, Better.co.uk (formerly Trussle), the average cost of a two-year fixed rate deal stands at 4.73% today. Average costs of a three-year and five-year fixes are pegged at 4.50% and 4.29% respectively. This compares to highs of more than 6.50% back in October 2022.

Better.co.uk says the most competitive deals are 4.08% for a two-year fix, 4.14% for a three-year, and 3.86% for a five-year. The best 10-year fixed rate deal today is priced at 3.99%.

The average two-year tracker rate today stands at 4.77%, compared to the leading deal of its kind which is priced at 4.39%. A typical standard variable rate (SVR) is just shy of 7% at 6.97%, according to Better.co.uk, reflecting the recent Bank Rate increase.

At the start of March there were 4,372 residential mortgage deals on the market, according to Moneyfacts. This compares to around 3,643 at the start of the year and just 2,560 since last Autumn’s mini-Budget. Yet it’s still a way off from the 5,300-plus deals on the market in December 2021, before interest rates began to climb.