Average five-year mortgage rate hits 6% for first time in three years

Summarised from 4 outlets · Updated 8 Oct, 08:13 · Archive

The average five-year fixed mortgage rate reached 6% on Monday, the highest in three years, as deals below 5% have nearly disappeared.

The average five-year fixed mortgage rate reached 6.00% on Monday morning, according to Moneyfacts, up from 5.98% on Friday. This marks the highest average five-year rate since 27 September 2023, when it stood at 6.03%. The average two-year fixed mortgage rate was also edging towards 6% at 5.98%.

Fixed mortgage rates have been rising in recent weeks as swap rates increase. These are the rates lenders use to price fixed-rate mortgages. As wholesale funding costs climb on the back of rising gilt yields, lenders have adjusted their rates upwards.

The availability of sub-5% deals has collapsed. Moneyfactscompare.co.uk reported 1,494 fixed-rate deals below 5% at the start of September. By Monday, this had fallen to just nine for borrowers outside Northern Ireland. Including deals available only to Northern Ireland borrowers, there were 107 sub-5% products, compared with 1,691 at the start of September.

Rachel Springall, a finance expert at Moneyfactscompare.co.uk, said: 'The past few weeks have seen pricing margins among major lenders come under immediate pressure from renewed swap rate volatility.' She added that 'the impact on sub-5% fixed mortgages has been brutal, with around 1,500 deals priced below 5% vanishing since the start of September'.

Buyers face an additional challenge when calculating how much they can borrow. Different mortgage calculators can produce significantly different answers, creating an £80,000 gap between estimates depending on which tool is used.

How it is being reported

• Mortgage rates hit 6 per cent as £80,000 borrowing gap leaves buyers facing a shockMortgage rates have hit 6% for the first time in three years as sub-5% deals plunge. Buyers also face an £80,000 gap between mortgage calculators.This Is Wiltshire · 8 Oct, 07:15
• Mortgage rates hit 6 per cent as £80,000 borrowing gap leaves buyers facing a shockMortgage rates have hit 6% for the first time in three years as sub-5% deals plunge. Buyers also face an £80,000 gap between mortgage calculators.Wiltshire Times · 8 Oct, 07:15
• Mortgage rates hit 6 per cent as £80,000 borrowing gap leaves buyers facing a shockMortgage rates have hit 6% for the first time in three years as sub-5% deals plunge. Buyers also face an £80,000 gap between mortgage calculators.Swindon Advertiser · 8 Oct, 07:15
• Mortgage rates hit 6 per cent as £80,000 borrowing gap leaves buyers facing a shockMortgage rates have hit 6% for the first time in three years as sub-5% deals plunge. Buyers also face an £80,000 gap between mortgage calculators.Gazette & Herald · 8 Oct, 07:15

In this story: Moneyfacts · Moneyfactscompare.co.uk · Rachel Springall · Northern Ireland

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