Understand
Average five-year mortgage rate hits 6% for first time in three years
Overview
The average interest rate on a new five-year fixed mortgage deal in the UK has reached 6% for the first time in three years. Lenders have increased costs due to international concerns over rising prices, government borrowing costs, and global economic uncertainty following the start of the Iran war. Moneyfacts reported that around 1,500 mortgage deals priced below 5% have disappeared since September, impacting home buyers and those renewing fixed-rate deals.
Key points
- The average interest rate on new five-year fixed mortgages has hit 6%, the highest since September 2023.
- The average rate on two-year fixed mortgages has risen to 5.98%, the highest since December 2023.
- Around 1,500 mortgage deals priced below 5% have vanished since the beginning of September.
- Major High Street lenders, including Barclays, HSBC, Lloyds Bank, Nationwide, NatWest, Santander, and TSB, repeatedly increased fixed rates during September.
- Global economic uncertainty and rising government borrowing costs linked to the Iran war have driven up the cost of deals.