The average cost of five-year fixed-rate mortgages has climbed to 6%, marking its highest level since September 2023, according to data from financial information provider Moneyfacts. The two-year fixed rate stands at 5.98%, also near three-year highs last seen in December 2023. The increases reflect broader turbulence in global bond markets, which has prompted major banks and building societies to raise their mortgage prices in recent weeks.
Market conditions have dramatically shifted for borrowers seeking lower-cost loans. The number of fixed-rate mortgage deals available below 5% has dropped to just nine options, representing a 99% decline since the beginning of last month when 1,494 such deals were on offer. Although the Bank of England has maintained its base rate unchanged since December last year, swap rates that determine fixed-rate mortgage pricing have moved upward due to bond market volatility.
Financial experts have characterized the impact as severe. According to Rachel Springall of Moneyfacts, borrowers anticipated rate stabilization, making the recent climb back to three-year highs disappointing news. The rate increase translates to concrete financial pressure—a £250,000 mortgage at 6% costs £158 more monthly than the same loan at 4.94%, the average rate available at the start of February.
The housing market is already showing signs of strain. Nationwide building society reported that annual property price growth halved in September. Industry representatives note that buyers are highly sensitive to mortgage rate changes, and the rapid disappearance of sub-5% deals compounds affordability concerns. Estate agents report that even modest monthly repayment increases can force buyers to reduce their budgets or withdraw from purchases entirely, while homeowners finishing existing fixed-rate deals face the prospect of significantly higher renewal costs.
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