The average five-year fixed mortgage rate has risen to 6.00%, its highest point since September 2023, while the average two-year fixed rate stands at 5.98%, its highest since December of that year. The increases come despite no change in the Bank of England base rate since last December; instead, volatility in bond markets has driven up the swap rates that lenders use to price fixed-rate deals.
Data from Moneyfacts shows that the number of fixed-rate mortgages available below 5% has collapsed from 1,494 at the beginning of last month to just nine today, a 99% drop. Most major banks and building societies have raised rates in recent weeks.
Rachel Springall, a finance expert at Moneyfacts, described the impact on rates as “brutal” and said the rise to three-year highs would be “disastrous news for borrowers” who had hoped for stability. According to the HomeOwners Alliance, the monthly cost of a £250,000 loan fixed at 6% for five years is £158 higher than the same loan at the 4.94% average rate seen at the start of February.
There are already signs that higher mortgage costs are weighing on the housing market. Nationwide building society reported last week that annual house price growth halved in September. Ian Harris, president of the estate agents' body NAEA Propertymark, said members were “seeing first-hand how sensitive buyers are to mortgage rates” and that the rapid disappearance of sub-5% deals would add further pressure on affordability. He noted that even small increases in monthly repayments could force some buyers to reduce their budgets or step back from a purchase altogether, while homeowners coming off fixed-rate deals may face significantly higher costs.