The average five-year fixed mortgage rate has hit 6% for the first time in three years, according to financial information provider Moneyfacts. This milestone marks a significant shift for borrowers, as jitters in the money markets make loans more expensive for lenders to offer.
Why Five-Year Fixed Mortgage Rates Are Rising
The surge in five-year fixed mortgage rates to 6.00%—the highest since September 2023—is driven by volatility in global bond markets. These market movements have pushed up swap rates, which directly influence the pricing of fixed-rate mortgages. Although the Bank of England base rate has remained unchanged since December last year, lenders are adjusting their offerings in response to these market pressures.
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The average two-year fixed rate is also climbing, now at 5.98%, its highest since December 2023. Rachel Springall, a finance expert at Moneyfacts, described the impact as “brutal,” adding that the rise “will be disastrous news for borrowers” who had hoped for stabilisation.
Impact on Borrowers: Fewer Sub-5% Deals
Borrowers in Great Britain are facing a stark reality: the number of fixed-rate mortgages costing below 5% has plummeted to just nine options, down from 1,494 at the start of last month—a 99% plunge. This dramatic reduction leaves little room for those seeking affordable fixed-rate deals.
For homeowners finishing their current fixed-rate deals, the prospect of securing a new loan at these elevated rates could mean significantly higher monthly payments. First-time buyers and those looking to remortgage are also feeling the squeeze.
Comparing Mortgage Rates: Then vs. Now
| Mortgage Type | Average Rate (Current) | Average Rate (Previous) |
|---|---|---|
| Five-Year Fixed | 6.00% | Below 5% (early 2025) |
| Two-Year Fixed | 5.98% | Below 5% (early 2025) |
| Sub-5% Deals Available | 9 | 1,494 |
Key Takeaways for Homebuyers and Remortgagers
- Act quickly: With sub-5% deals vanishing, locking in a rate soon could prevent further cost increases.
- Consider long-term fixes: Five-year fixes offer stability, but compare with shorter terms to balance flexibility and cost.
- Seek expert advice: A mortgage broker can help navigate the limited options and identify competitive deals.
- Budget for higher payments: If your current deal ends soon, prepare for potentially higher monthly outgoings.
What’s Next for Mortgage Rates?
The future trajectory of five-year fixed mortgage rates hinges on bond market stability and Bank of England decisions. While no base rate change has occurred since December, swap rates remain volatile. Borrowers should monitor market news and consult professionals to make informed choices.
FAQ
Why have five-year fixed mortgage rates reached 6%?
Rates have risen due to volatility in global bond markets, which has increased swap rates—the rates at which lenders borrow money. Even though the Bank of England base rate hasn't changed since December, these market pressures have forced lenders to raise their fixed-rate offerings.
How many sub-5% mortgage deals are left?
According to Moneyfacts, there are only nine fixed-rate mortgages costing below 5% available in Great Britain, a 99% drop from 1,494 at the start of last month.
What should borrowers do if their fixed-rate deal is ending?
Borrowers should act quickly to secure a new deal, consider longer-term fixes for stability, and consult a mortgage broker to explore the best available options. Budgeting for higher monthly payments is also crucial.
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