Average five-year mortgage rate hits 6% for first time in three years
The cost of a new fixed-rate mortgage has been rising in recent weeks as lenders face higher costs.
Average five-year mortgage rate reaches 6% for first time in three years
The average interest rate on a new five-year fixed mortgage has climbed to 6% for the first time in three years, according to figures.
Home loan costs have been increasing in recent weeks as lenders contend with higher expenses amid international worries over rising prices, interest rates and government borrowing costs.
That means home buyers and anyone remortgaging onto a fixed deal have seen around 1,500 mortgage products priced below 5% disappear since the start of September, according to the financial information service Moneyfacts.
It called the situation "brutal" for borrowers, with the average rate on five-year deals now at 6%, and at 5.98% for two-year fixed mortgages.
For borrowers, the interest rate on a fixed mortgage stays the same until it ends, usually after two or five years, when a new deal is taken out to replace it. Most homeowners and buyers have this type of mortgage.
Since the Iran war began, global economic uncertainty has been driving up the cost of deals.
Moneyfacts said the biggest High Street lenders had repeatedly raised fixed rates during September. Barclays increased selected fixed rates on four occasions, while HSBC, Lloyds Bank, Nationwide, NatWest, Santander and TSB each made three rounds of increases.
As a result, the average rate on a new five-year deal is at its highest level since September 2023. For two-year deals, the average rate is at its highest since December 2023.
Interest rates move according to the Bank of England's base rate and market conditions.
"Average fixed mortgage rates rising back to three-year highs will be disastrous news for borrowers," said Rachel Springall, finance expert at Moneyfacts.
"Borrowers who were hoping mortgage rates would stabilise will be disappointed."
She said those nearing the end of a fixed deal would be "wise to seek advice and compare deals carefully".
Some lenders may let people secure a rate three months before their current deal ends, while others may allow six months, she said.