The average five-year fixed mortgage rate has climbed to 5.91%, its highest level since October 2023, according to new data from moneyfactscompare.co.uk. This comes as 750,000 households are warned they face a 'huge shock' when their current deals expire.
The average two-year fixed rate also rose to 5.87%, its highest point since April 2021. The increases mark the sharpest level since the period following the Conservative Party's mini-budget under Liz Truss.
Lender repricing wave
Rachel Springall, finance expert at moneyfactscompare.co.uk, said: "A wave of mortgage rate hikes swept across the market this week, with fixed rate increases firmly dominating lender repricing."
She added: "Swap rates remain near 30-day highs, so there is still some uncertainty around the future direction of fixed mortgage pricing. More hikes could be coming if lenders have not yet caught up to higher swap rates."
Ms Springall said moving off these expiring deals "will be a huge shock for borrowers."
Advice for borrowers
Mark Harris, chief executive of SPF Private Clients, said borrowers have more flexibility than many realise. He said: "Mortgage offers are typically valid for six months, so if you are concerned that rates will rise further, it would be sensible to lock into a new deal ahead of time now."
He added: "If you would struggle to pay the mortgage were rates to rise, then a fixed rate is a sensible option."
Market concerns
Ian Harris, President of NAEA Propertymark, said: "Rising mortgage rates will be a concern for many homeowners and prospective buyers already navigating challenging affordability conditions. With fixed-rate deals continuing to increase ahead of the next Bank of England decision, consumers are facing greater uncertainty over the cost of borrowing and what this means for their household finances."
He added: "Those coming to the end of historically low fixed-rate deals could face a significant increase in their monthly repayments when they remortgage. This underlines the importance of consumers engaging with a qualified mortgage adviser and exploring their options as early as possible, rather than waiting until their existing deal expires."
"For the housing market to operate effectively, confidence and affordability are crucial. Continued volatility in mortgage rates risks putting further pressure on buyers who are already stretching their finances and could lead some households to delay moving altogether."
"Government, lenders and the wider industry must continue to work together to support borrowers through this period of uncertainty. Ensuring consumers have access to clear information, appropriate advice and a competitive range of mortgage products will be vital to maintaining activity and confidence across the housing market."
