The top mortgage rates for 2010

With interest rates still at a record low, Christina Jordan rounds up the best deals across the market.

Yesterday the Bank of England's Monetary Policy Committee decided to maintain the Base Rate at its historic low of 0.5%. This is the tenth month in a row that interest rates have been held, and spelled good news for mortgage borrowers.

Indeed, more lenders have announced cuts to their trackers and fixed rates since the New Year, including the country's largest building society Nationwide. And the last two months have seen a small shift towards higher loan-to-value products. Let's not get carried away -- it is still difficult to get hold of a really competitive deal if you only have 10% upfront, but those who can muster 15% are now starting to see increasingly attractive products available to them. Good news indeed.

SVRS are going up

But there is one trend that is particularly worrying for mortgage borrowers, and that is the upward creep of standard variable rates (SVRs). Recent figures out from financial information provider Moneyfacts show that in the 10 months that Base Rate has been held at 0.5%, eight lenders have actually increased their SVRs, and the pace of increases has quickened in the last couple of months.

Most of the culprits are smaller building societies, a few of which have SVRs around the 6% mark. Considering some SVRs are just 2.5%, this is bad news.

If you are on a relatively pricey SVR and want to take advantage of low variable deals, or you are a first-time buyer looking for the cheapest initial rate, trackers and discounted rates are still priced most keenly. There is a wide choice of rates available under 3%, and some are now even available to borrowers with just 20% equity or deposit -- a recent very welcome development.

If you believe rates are set to remain low for the next few years, as many experts think, there is a good case for taking one of these super-low rates and benefiting from cheap monthly repayments.

Of course, variable rates like discounts and trackers are only a good idea if you could afford your repayments if rates rise significantly.

Below are my favourites:

15 fabulous variable deals

*First-time buyers only

What if rates rise?

If the inevitable rise in interest rates could cause you some serious affordability problems you might want to reassess your mortgage choices now. Most mortgage pundits agree that if the Base Rate goes up virtually all lenders will pass on all increases to their SVR, and trackers will automatically rise.

So while a fixed rate will cost you more in the short-term, locking into a rate now could mean you avoid any payment problems and arrears in the future. It could therefore be a smart move for those on a tight budget.

After all, when interest rates start to rise there is no telling how fast they will go up or by how much. Today's best five-year fixed rates at sub-5% might look very good value for money in two years' time compared to trackers at Base Rate plus 2.5%.

Of course, whether or not you should fix depends on your circumstances, finances, attitude to risk and view on interest rates (if you have one). But the only way to guarantee your mortgage payment for a set period is to fix your rate.

Below are some of my favourite fixes:

15 fantastic fixes

*First-time buyers only

** a further 0.24% discount is available to borrowers who take the lender's Homecover insurance, making the two-year fix 4.75% and the five-year fix 5.5%

Use lovemoney.com's innovative new mortgage tool to find the best mortgage for you online.

Get help from lovemoney.com

If you need help getting the best mortgage use our resources.

First, adopt this goal: Cut the cost of your mortgage and pay it off early

Next, watch this video: Getting through the mortgage maze

Then, why not have a wander over to Q&A and ask other lovemoney.com members for hints and tips about what worked best for them?

At lovemoney.com, you can research all the best deals yourself using our online mortgage service, or speak directly to a whole-of-market, fee-free lovemoney.com broker. Call 0800 804 4045 or email mortgages@lovemoney.com for more help.

This article aims to give information, not advice. Always do your own research and/or seek out advice from an FSA-regulated broker (such as one of our brokers here at lovemoney.com), before acting on anything contained in this article. 

Finally, we tend to only give the initial rate of a deal in our articles, but any deal which lasts for a shorter period than your mortgage term will revert to the lender's standard variable rate when the deal ends. Before you take out a deal, you should always try to find out from your lender what its standard variable rate is and how it will be determined in the future. Make sure you take all this information into account when comparing different deals.