The average cost of a five-year fixed-rate mortgage has hit 6% for the first time in three years, as money market jitters make the loans more expensive for lenders to provide.
Key facts
- The average five-year fixed-rate mortgage has reached 6.00%, according to Moneyfacts.
- It is the highest level since September 2023.
- The average two-year fixed rate stands at 5.98%, its highest since December 2023.
- Lenders have been raising prices amid turmoil in bond markets and expectations of a base rate rise.
The average cost of a new five-year fixed-rate mortgage has hit the 6% barrier for the first time in three years, as turbulence in the money markets makes the loans more expensive for lenders to offer.
Figures from financial information provider Moneyfacts show the average five-year rate is now 6.00%, its highest point since September 2023, according to the Guardian. The average two-year fixed rate is not far behind at 5.98%, its highest since December of the same year.
The BBC reports that the cost of a new fixed-rate mortgage has been rising in recent weeks as lenders face higher costs.
According to the Guardian, banks and building societies have been raising prices as jitters in the money markets increase expectations of a base rate rise. These pressures feed through into the rates lenders charge borrowers.
The move marks a notable milestone for the mortgage market, with both the two-year and five-year average rates now sitting close to or at the 6% level after a period of climbing costs.
Why it matters
Mortgage rates directly affect the monthly payments of homeowners and the affordability of buying a property. Rates reaching 6% could mean higher costs for those remortgaging or taking out new loans, squeezing household budgets at a time of broader economic uncertainty.
Frequently asked questions
What is the average five-year fixed mortgage rate now?
According to Moneyfacts figures reported by the Guardian, the average five-year fixed-rate mortgage is now 6.00%, its highest since September 2023.
Why are mortgage rates rising?
The Guardian reports that turmoil in bond markets and increased expectations of a base rate rise have made the loans more expensive for lenders to offer, prompting banks and building societies to raise prices.
What is the average two-year fixed mortgage rate?
The average two-year fixed rate is 5.98%, its highest since December 2023, according to Moneyfacts figures cited by the Guardian.