The average five-year fixed-rate mortgage in Great Britain has climbed to 6.00%, marking its highest level since September 2023, according to data from financial information provider Moneyfacts. The two-year fixed rate has similarly risen to 5.98%, its peak since December of that year. These increases come as turmoil in global bond markets has prompted major banks and building societies to raise their pricing in recent weeks.
The availability of affordable mortgage options has contracted dramatically during this period. Borrowers searching for fixed-rate mortgages priced below 5% now have only nine options available, representing a 99% decline from the start of last month when 1,494 deals met that criteria. This sharp reduction reflects the swift repricing across the lending market.
The Bank of England has maintained its base rate unchanged since December last year, but volatility in bond markets has driven up swap rates, which directly influence the pricing of fixed-rate mortgages. Finance experts have characterized the impact on rates as significant, with concerns that borrowers anticipating mortgage cost stabilization will face disappointment instead.
The rising costs carry tangible consequences for household finances. According to the HomeOwners Alliance, a £250,000 loan fixed at 6% for five years costs £158 more monthly than the same loan at 4.94%, the average rate reported at the start of February. Higher mortgage expenses are already showing effects on the housing market, with Nationwide building society reporting that annual property price growth had halved in September.
Experts suggest the affordability pressures will intensify. Real estate professionals report observing buyer sensitivity to mortgage rate changes, and note that the rapid disappearance of sub-5% deals will compound challenges for those seeking to purchase property or refinance existing mortgages at the end of fixed-rate periods.
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