If you are thinking about buying, selling or remortgaging over the coming months, the state of the mortgage market is probably on your mind. Here we look at where things stand now and what that might mean for your plans.

Where interest rates sit

Earlier this year global events caused the cost of lending to rise for a short time. Since then, things have settled down and many lenders have started lowering their mortgage rates again. However, inflation is still around 3% which is a little higher than the Bank of England's target of 2%, so interest rates have not come down as much as some people expected.

In June, the Bank of England kept its base interest rate at 3.75%.This was the fourth time in a row it decided not to change the rate. The next decision will be made at the end of July.

What that means for mortgage rates

Average two and five-year fixed rate mortgages are currently sitting around 5.5%.

The most competitive deals are lower, and buyers with a larger deposit (around 40% or more) may be able to find fixed rates at closer to 4.25%. Which is a good reminder that the rate you are offered depends heavily on your deposit and your circumstances.

We believe one rate to avoid drifting onto is your lender's standard variable rate, which now averages above 7%. If your current deal is coming to an end, it is well worth lining up a new one rather than letting it lapse.

Affordability and what to weigh up

Lenders could allow you to borrow as much as four and a half times your income, although this varies so it’s worth shopping around. And, as noted above, a bigger deposit lowers your loan-to-value and unlocks better rates, so it is worth building one up if you can.

It also helps to get a mortgage agreement in principle before you start viewing, so you know your budget and can move quickly when the right home appears. Remember to factor in the other upfront costs of buying in Scotland, including Land and Buildings Transaction Tax and your legal fees.

The type of mortgage you choose – whether a fixed rate for certainty or a tracker for flexibility – will depend on your personal situation and appetite for risk. If you are unsure, a qualified mortgage adviser can go through all of your options with you.

Getting the right advice

Mortgage rates change from week to week, and the figures above are a snapshot rather than a promise. You are always best to speak to a professional who can look across the market and make recommendations based on your circumstances.

At Paris Steele, our estate agency and conveyancing teams work side by side, so whether you are buying, selling or remortgaging, you have everything under one roof.

You can also request mortgage advice through us and we will put you in touch with a trusted adviser. First-time buyers may also want to read our recent guide to the First Home Fund.

For a friendly chat about your move, call our North Berwick office on 01620 892138, our Dunbar office on 01368 862746, or the Property Shop on 01620 497497.