Average five-year fixed mortgage rate hits 6% for first time in three years
Banks and building societies raise prices as turmoil in bond markets increases expectations of base rate rise The average cost of a five-year fixed-rate mortgage has hit the 6% bar
By The Guardian
The average five-year fixed mortgage rate has reached 6% for the first time in three years, adding to costs for homeowners looking to remortgage and people seeking a new deal.
Financial information provider Moneyfacts recorded an average five-year residential fixed rate of 6.00% on Monday morning, up from 5.98% on the previous Friday. It was the highest level since September 2023, when the average stood at 6.03%.
The average two-year fixed rate also rose, reaching 5.98%. That was its highest level since December 2023, according to the figures reported.
The increases have followed a period of turbulence in financial markets. Rising bond-market yields have increased the cost of funding mortgages, while traders have raised their expectations of a possible Bank of England base-rate increase.
Moneyfacts said the biggest high street lenders made repeated increases to selected fixed mortgage rates during September. Barclays raised some rates four times, while HSBC, Lloyds Bank, Nationwide, NatWest, Santander and TSB each increased selected rates on three occasions.
The changes have also reduced the number of fixed mortgage deals priced below 5%. Moneyfacts expert Rachel Springall described the impact on borrowers as “brutal”, with around 1,500 sub-5% deals disappearing since the start of September, according to reports of the figures.
The rise in fixed-rate mortgages comes despite the Bank of England base rate being held at 3.75% in September. Fixed mortgage pricing is also influenced by swap rates and wider market expectations about inflation and future interest rates.
Borrowers whose existing fixed deals are due to end face the prospect of moving on to more expensive rates. The latest figures mean that anyone comparing a new five-year fixed mortgage will now find the average deal at 6%, although the rate available to an individual will depend on factors including the loan size, deposit and lender criteria.