What next for mortgage rates: It's the end of an era for rock bottom mortgage rates after November hike

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For years mortgage rates have been getting cheaper but the downward trend is finally over.

Mortgage rates are now definitely on the up following November's rise in the base rate.

Those on tracker rates will be the first to feel the pinch: more than 20 banks and building societies are passing on the full 0.25 percentage point rise in the Bank of England base rate to borrowers on standard variable rates with the first higher payments set to hit in December. 

Advertised mortgage rates below 1 per cent have also all but disappeared, with figures from Moneyfacts showing the lowest two-year tracker rate on offer is now 1.24 per cent, up from 0.99 per cent at the start of November in line with the 0.25 per cent rise.

Fixed-rate mortgages previously available below 1 per cent had already risen in advance of the Bank of England rate decision. 

There is now just one mortgage priced below 1 per cent - a two-year discount rate at 0.99 per cent, linked to Furness Building Society's 5.29 per cent standard variable rate, which may not last long.

Home owners are being offered the chance to lock into record low fixed rates

Top of the fixed-rate table is a 1.32 per cent two-year fixed rate from Bank of Ireland, which comes with a very hefty £2,495 fee and is available to those with a 40 per cent deposit or equity to put in.

The best of the rest of the two-year fixes for those with big deposits come in around 1.35 per cent.

Those looking for longer term security in the form of a five-year fix can trade that for a slightly higher rate of around 2.17 per cent from Barclays, which comes with another big fee of £2,680.

Even those with a 10 per cent deposit can access historically very low rates. Atom Bank has a two-year fix at 1.79 per cent for them, while Yorkshire Building Society offers 1.89 per cent.

Over five years they can fix at 2.45 per cent with Atom Bank and 2.54 per cent with Metro.

The very best and cheapest deals on offer are for those with a substantial whack of equity to put in but there are competitive rates across the board, even for those with just a 5 per cent deposit.

It's therefore worth thinking about remortgaging if you've come to the end of your deal and are sitting on your lender's standard variable rate. 

These rates average at around 5 per cent - considerably higher than the competitive rates available for newer deals.

You can check best buy tables and the best mortgage rates for your circumstances with our calculator powered by London & Country.

What are the best mortgage deals? 

The attraction of a two-year fix may be lower rates now and extra flexibility, but that comes at the expense of needing to remortgage in two years to avoid slipping onto a more expensive standard variable rate.

And with the base rate still at just 0.5 per cent, there is really only one direction for rates to go in future - up. A five-year fix gives the opportunity to lock into a low rate for a longer period and avoid extra fees and higher rates in a relatively short time.  

Unless you have a good reason to take a two-year fixed rate, such as needing to move or expecting to have to sell your home, brokers have suggested that five-year fixed rates might be a cheaper long-term bet.

Even if the base rates stays low, if lenders are worried about the effect of Brexit, they are likely to make it harder for borrowers to get a mortgage by making their affordability and income tests harder to pass.

Whatever the right type of mortgage for your circumstances, shopping around and speaking to a good mortgage broker is a wise move.  

Borrowers should have a quick look at the rates below, these are regularly updated by This is Money's mortgage team. If you spot a deal you think has been pulled or should be in there, email us via editor@thisismoney.co.uk with mortgage rates in the subject field.

For a full rate check use This is Money's mortgage finder service and best buy tables, these are supplied by our independent broker partner London & Country.  

Best fixed-rate mortgage deals

Bigger deposit mortgages

Five-year fixed rate mortgages

Chelsea Building Society has a five-year fixed-rate mortgage at 1.67 per cent with £1,200 fees at 65% loan-to-value

Sainsbury's Bank has a five-year fixed-rate mortgage at 1.68 per cent with £745 fees at 60% loan-to-value

Two-year fixed rate mortgages

YBS has a two-year fixed-rate mortgage at 1.17 per cent with £1,700 fees at 75% loan-to-value

AA has a two-year fixed-rate mortgage at 1.18 per cent with £1,245 fees at 60% loan-to-value

Mid-range deposit mortgages

Five-year fixed rate mortgages

Sainsbury's has a five-year fixed-rate mortgage at 1.83 per cent with £745 fees at 75% loan-to-value

Coventry Building Society has a five-year fixed-rate mortgage at 1.85 per cent with £999 fees at 75% loan-to-value

Two-year fixed rate mortgages

YBS has a two-year fixed-rate mortgage at 1.17 per cent with £1,700 fees at 75% loan-to-value 

AA has a two-year fixed-rate mortgage at 1.22 per cent with £995 fees at 75% loan-to-value

Smaller deposit mortgages

Five-year fixed rate mortgages

Atom Bank has a five-year fixed-rate mortgage at 2.45 per cent with £900 fees at 90% loan-to-value

Atom Bank also has a five-year fixed-rate mortgage at 2.49 per cent with £0 fees at 90% loan-to-value

Co-op Bank has a five-year fixed-rate mortgage at 2.49 per cent with £1,754 fees at 90% loan-to-value

Two-year fixed rate mortgages

Co-op Bank has a two-year fixed-rate mortgage at 1.79 per cent with £1,754 fees at 90% loan-to-value

YBS has a two-year fixed-rate mortgage at 1.89 per cent with £1,900 fees at 90% loan-to-value

Metro Bank has a two-year fixed-rate mortgage at 2.54 per cent with £1,199 fees at 90% loan-to-value

Best tracker rate mortgages 

Tracking a 0.5 per cent base rate may seem an odd decision when rates are likely to only go up - and you could fix for up to five years at a lower rate - however, there is one big advantage to a good lifetime tracker, flexibility.

A fixed-rate mortgage will almost inevitably carry early repayment charges, meaning you will be limited as to how much you can overpay, or face potentially thousands of pounds in fees if you opt to leave before the initial deal period is up.

You should be able to take a good fixed mortgage with you if you move, as most are portable, but there is no guarantee your new property will be eligible or you may even have a gap between ownership.

A good lifetime tracker has no early repayment charges, you can up sticks whenever you want and that suits some people.

Make sure you stress test yourself against a sharper rise in base rate than is forecast.

Lifetime trackers 

Coventry BS has a lifetime base rate tracker at 1.39 per cent with fees of £999 at 50% loan-to-value. An offset version has a 1.59 per cent rate

The society also has a lifetime base rate tracker at 1.75 per cent with a £999 fee at 85% loan-to-value

Shorter trackers

Nationwide has a five-year tracker at 1.79 per cent, or base rate plus 1.29 per cent, with £499 fees at 60% loan-to-value

Furness Building Society has a two-year discount rate at 0.99 per cent (4.30 per cent discount), with £999 fees at 75% loan-to-value. It has no early repayment charges

What is happening with interest rates?

The Bank of England has a target, set by Government, to keep inflation at around 2 per cent. 

Having been below this rate for some time, giving the Bank plenty of room to leave the base rate on hold, inflation has more recently ticked up.

Most recently, the Office for National Statistics revealed consumer price inflation hit 3 per cent.

The base rate isn't the only influence on mortgage rates though and longer-term swap rates can regularly shift on money market sentiment, without any central bank moves. 

> Read: When will interest rates rise? Our round-up of the latest thinking 

Can you get a mortgage? 

Banks and building societies have broadly got to grips with the tougher new mortgage rules introduced more than three years ago in April 2014.  

But getting a mortgage is tougher than it once was. You will need to get your finances in order and be prepared for the lengthier application process and in-depth affordability interviews getting a mortgage requires nowadays. 

Lenders also apply different standards to what they will lend.

Weigh up the above, check the rates here and in our best buy mortgage tables, have a scout around what the best deals look like – and speak to a good independent broker.

There are a couple of things to look out for if you do decide to fix.

You need to check the bumper arrangement fees are worth paying – if you don’t have a big mortgage you may be better off with a slightly higher rate and lower fee.

It’s also wise to think carefully about whether you expect to move home soon. A good five-year fix should be portable, so you can take it with you.

But your new property will need to be assessed and you might need to borrow extra money, and so your lender could still say no. Getting out of a fixed rate typically requires a hefty hit to the pocket from early repayment charges.

Today's low rates may stick around, they may even inch a little lower, but they may also be swiftly axed.

If you think you’d kick yourself if you miss out on one, then set aside some time to consider what to do. 

Choosing a mortgage - the essential quick guide

1. How big a deposit do I need?

To get the full choice of deals raising a decent deposit is still vital. The benchmark figure is 25 per cent, if you have this then you'll be getting close to the best rates, although for an absolute cheapest deal you're still likely to need 40 per cent.

However, a selection of better deals for smaller deposits is also now available.

2. Should I take a fixed rate? 

The consensus is that there will be no dramatic sudden interest rate increases. However, these forecasts are no guarantee that rates won't rise and when rates do rise trackers will get more expensive. [Remember almost no one forecast base rate heading down to 0.25 per cent]

Borrowers needing security should consider the extra cost of a fix as worthwhile. If you are taking a tracker because you couldn't afford the equivalent fixed rate then you are putting yourself in a very dangerous position.

If you decide to take a fix you need to carefully consider how long for. Two-year deals are cheap but only offer very short-term security and incur extra costs when you remortgage. Five-year deals lock you in for longer and come with slightly higher rates but better security and no need to remortgage in a relatively short space of time.

3. Should I take a tracker rate?

Tracker rates are essentially they are a gamble. What looks like a bargain rate now, could soon get very expensive when interest rates rise.

Anyone considering a tracker needs to make sure they are not just storing up a problem for the future. If the tracker comes with an early redemption penalty that would make it expensive to jump ship, then make sure your finances could take a rise of at least 2 per cent to 3 per cent in interest rates.

For that reason we at This is Money like tracker deals that fit into one of these three categories: no early redemption penalties, a cap to how high the rate will go, or that let you jump ship for a fixed rate if rates rise.

4. Should I get off a standard variable rate?

Standard variable rates are what borrowers slip onto by default when they finish a fixed or tracker deal period.

They can typically be changed by lenders at any time - without the Bank of England moving rates, they may also rise or fall by more than any move in base rate.

A number of mortgage borrowers have fallen victim to lenders hiking their standard variable rates in recent years, despite the base rate remaining stable.

Never forget than without a Nationwide-style base rate lock guarantee, your SVR could be hiked at any time, as could a discount rate linked to it.