This post is the May update to our monthly review on what is happening with mortgage interest rates. You can see the previous months here:
Q4 2024 – October was missed, November, December
Q1 2025 – January, February, March.
Q2 2025 – April
I do these monthly posts as there has been a lot in the news about interest rates in recent years especially since the “mini budget”.
I found it confusing and I am a mortgage broker! It was quite frustrating to hear how interest rates are now under 5%, 4%, 3% etc, but the reality is that most people would not have been eligible for those products. Typically they were only eligible for people with 40% equity or a 40% deposit. And even those who were eligible may have been better off paying a higher interest rate as they usually came with high arrangement fees.
At this point in writing the article, I have not yet done the figures. With the recent base rate drop, the constant barrage of rate change emails and what I have seen in applications, I am expecting interest rates to be lower on the mainstream mortgages. With the adverse rates I am not sure, I do not recall seeing many rate reduction emails so it will be interesting to see where rates are…
What mortgage rates we are looking at?
I look at 4 types of mortgages. Mortgages that I think would appeal to a wider range of people than 60% LTV with a large fee!
These 4 will remain the same so ensure a fair comparison. The 4 scenarios we are looking at are:
- 2 year fix at 90% LTV with a £999(ish) fee.
- 5 year fix at 90% LTV with a £999(ish) fee.
- 2 year fix at 85% LTV with a £999(ish) fee for adverse*
- 5 year fix at 85% LTV with a £999(ish) fee for adverse*
Adverse covers a lot, from some late payments through to defaults or CCJs or bankruptcy. For simplicity, I will say someone with 5 defaults for £1,000 each dated 2 years old at time of application. Enough to mean it will not be accepted on the high street but not the most severe end of adverse either.
What mortgage rates are available now?
*October update I missed which is why its skewed that month.
There does seem to have been some noticeable differences this month.
You can see last month, the mainstream rates were starting to drop. This usually happens when lenders are expecting the base rate to come down, I made a post about that here.
What do we make from the rest of it?
- Adverse to non adverse – the amount they are coming down by seems to vary.
- 2 to 5 year – the amount also varies here.
I am struggling to see a trend other than they are all seemingly going in the same direction over the last 3 months or so.
For the adverse products, I have also ignored the lenders who credit score applications as realistically although it is within criteria, the likelihood of being accepted is very very low.
Summary
I am struggling to summarise everything. As above, there is no real trend. Rates are edging down. 2 year deals seem to be dropping quicker than 5 year rates.
And thats about it. I dont fancy making any predictions for the next month. I think things will settle down now, but I would not fancy putting any money on it with how things have been this year.