The average five-year fixed-rate mortgage rate has climbed to 6.00%, marking its highest level since September 2023, according to data from Moneyfacts. The two-year fixed rate stands at 5.98%, also near its peak from December 2023. Financial institutions have raised prices in recent weeks in response to turbulence in global bond markets, which has increased expectations about potential base rate movements.
The availability of affordable mortgages has contracted sharply. Fixed-rate mortgage options priced below 5% have dropped from 1,494 deals at the start of last month to just nine currently available—a 99% decline. This dramatic reduction reflects the impact of elevated swap rates, which determine pricing for fixed-rate mortgages, even though the Bank of England has held its base rate steady since December of last year.
The cost increase carries significant implications for borrowers. A £250,000 loan fixed at the current 6% rate over five years would cost £158 more monthly compared to a rate of 4.94%, the average from earlier in the year. Financial experts have characterized the situation as damaging for consumers, particularly those renewing existing mortgages or considering property purchases. Moneyfacts analyst Rachel Springall noted that borrowers anticipating rate stabilization would face disappointment.
Market conditions suggest broader effects on housing activity. Nationwide building society recently reported that annual property price growth had halved in September. Real estate industry representatives indicate that higher borrowing costs are influencing buyer behavior, with some consumers reducing purchase budgets or withdrawing from transactions entirely. Homeowners concluding fixed-rate periods may encounter substantially higher repayments, potentially affecting decisions to relocate or invest in property.
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