Best mortgage deals 2023 for first-time buyers, fixed-term rates and tracker mortgage deals

The housing market has been hugely impacted by the rise in interest rates in the past year, meaning many Brits are struggling to pay their mortgages or get on the housing ladder due to spiraling costs.

Research published in the Cost of Living report by UK savings site Vouchercodes.co.uk in August 2022 found that 11 per cent of potential buyers had to push back plans to buy a home by at least one year, while almost a third (29%) of prospective home buyers in the UK said they cannot afford to buy a home.

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Thankfully, mortgage rates have started to fall from the highs we saw after the government announced its mini-budget in September, meaning rates below five per cent are common, and buyers may even be able to find some sub-4% deals. However, the cheapest deals are still five times the record lows of 0.79% recorded in late 2021.

READ: 28 easy tricks to make your home sell fast without spending a penny

So who has the best mortgage deals at the moment? We've rounded up some of the best mortgage rates available right now, but note that while these figures are correct at the time of writing, there's no guarantee the specific deals will remain available longer-term. Working with a mortgage broker will help to provide you with the best current deals for your situation.

All deals are calculated based on the average UK house price of £290,000 with a mortgage term of 25 years.

Best mortgage deals for first-time buyers

First-time buyers looking for a mortgage may be able to take advantage of special deals or schemes allowing them to purchase a property with less than the standard ten per cent deposit. These first-time buyer mortgage deals, or 95% mortgages, allow buyers to invest in a property with a deposit of five per cent of the purchase price.

READ: Discover the most affordable UK cities for first-time buyers

© Photo: iStock

Best 95% LTV/ first-time buyer fixed-rate mortgage deals

Best fixed-rate mortgage deals in the UK

Fixed-rate mortgages can be appealing to buyers, as they mean that your mortgage rate will not change for a set period of time – from as little as two years to as many as ten years. The rates will also vary depending on the size of your deposit.

The rates below are based on a 60%, 80% and 90% loan-to-value purchase of a property that costs £290,000 where the mortgage is taken over 25 years.

Best 2 year fixed-rate mortgage deals

Best 5 year fixed-ra​​​​te mortgage deals

Best 10 yea​​​​r fixed-rate mortgage deals

Best tracker mortgage deals in the UK

A tracker mortgage, or variable rate mortgage, means that your monthly mortgage payment can fluctuate along with your interest rate. This can be a good thing for homeowners when reduced rates occur, but may also mean that your monthly payments increase at times that interest rates rise.

MORE: Phil Spencer's insider tips on how to haggle on your house purchase

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Discover the best two and five year tracker rate mortgage deals below. As above, these rates apply to 60%, 80% and 90% loan-to-value purchases of a property that costs £290,000 where the mortgage is taken over 25 years.

Best 2 year tracker mortgages in the UK

Best 5 year tracker mortgages in the UK

Still unsure about which mortgage is best for you? We caught up with  David Hollingworth, Associate Director at L&C Mortgages, to get the answers to some of the most common mortgage-related questions.

Will mortgage rates go down in 2023?

"When will rates come down is probably the million dollar question, especially as there’s just been another hike to base rate in May and speculation of another rise to come. If inflation begins to fall back as hoped then it could mean that the increases in Base Rate are at least nearing their peak. That may not see much change in fixed rates in the near term but if the situation improves more quickly than anticipated it could see improvements to fixed rates. Longer term fixed rates are unusually lower than the shorter term options which is an indicator that the markets expect interest rates to fall back over time. Whether that will be as soon as this year is another matter. Of course there are never any guarantees when it comes to rate movements and borrowers need to keep a focus on what will suit their needs rather than taking any big gambles on future rate moves."

Is it worth considering a 100 percent mortgage?

"Until recently any mortgages offering up to 100% of the purchase price have relied on additional security being put up by family, whether that is additional cash locked down in a savings account or equity in the parental home as collateral. However the recent launch from Skipton BS is the first time since 2008 where a deal has offered the chance for a first time buyer to buy without a deposit or help from a parent. This could offer some first time buyers the chance to buy sooner than they otherwise would be able to by removing the need to scrape together a deposit of at least 5% of the purchase price. 

RELATED: Martin Lewis' cautious warning about new 100% mortgages

"This product will carry additional eligibility requirements and borrowers will need to demonstrate that they can afford it. However, it could help those that feel they are battling against the odds to save for a deposit whilst paying a high rent. There is a higher risk of negative equity if prices fall back so that needs to be considered but equally if prices rise further, it could push ownership further from reach."

What should first-time buyers consider when looking for a mortgage?

"The two challenges for first-time buyers are saving a big enough deposit and being able to borrow enough to meet the required purchase price. Criteria can therefore play as big a part as interest rate in finding the right match so it makes sense to take advice. Lenders will base the amount they can lend not only on income level but also on the outgoings to make sure that the affordability is tailored to the individual circumstance.

"When it comes to deposit then the general rule of thumb is that the bigger deposit the better the range of options and rates are likely to be. It also makes sense to factor in any additional costs such as arrangement fees and incentives that could help with valuation fees or offer a cashback. These may add up to better overall value than a lower rate carrying bigger fees."

Is now a good time to remortgage?

"Given the rapid increases in interest rates and the higher cost of living that homeowners face, it’s never been more important to make sure you get the best value from your mortgage deal. Although borrowers will have been used to historically low rates in recent years the higher rate environment means that shopping around will be crucial to keep a tight rein on the mortgage rate. 

"Fixed rates have stabilised and improved since they rocketed after the mini budget so although borrowers coming to the end of a deal will still be facing a higher payment it’s far less volatile than it was. Fixed rates will give security and certainty so that borrowers can pin down their mortgage costs whereas tracker rates have been rising in line with base rate rises but could fall back if interest rates drop in time.

"Many lenders will offer remortgage deals that can cover many of the fees associated with a remortgage, such as the valuation fee and the basic legal work required to make the switch of lender. It may be worth paying a slightly higher interest rate to avoid those costs and an adviser will help work through the numbers to find the right overall combination."

How can buyers get the best mortgage rate?

"When buying a new home there may well be a bigger deposit from the sale of the previous home which could mean that the mortgage is a lower percentage of the property value, often referred to as loan to value or LTV. The very best rates are often reserved for those with a low LTV so a next time buyer could find that they have a good choice of mortgage rates.  They should think about what they want from the new mortgage and what their plans may be.  For example it’s possible to fix a mortgage for the longer term, which could suit a buyer who is stretching but plans to be in the property for the longer term.    Others may prefer to keep their options open if they feel that their circumstances could change. 

"It makes sense to do the numbers before looking at property so that they understand all the costs including estate agent fees, survey costs and legal and stamp duty costs. That will help give a clearer picture of what mortgage deals could be on offer and how much may need to be borrowed."

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