Average fixed mortgage rates in the UK have reached the 6% mark for the first time in nearly three years, reflecting growing pressures from financial markets and raising concerns among borrowers and industry professionals. According to data from financial information provider Moneyfacts, the typical five-year fixed-rate mortgage has climbed to 6.03%, its highest level since September 2023. Meanwhile, two-year fixed rates have also risen, standing at 5.98%, the highest since December 2023.

This increase comes despite the Bank of England base rate remaining unchanged since December last year. The key driver behind the rise is volatility in global bond markets, which has led to higher swap rates — a crucial factor lenders use to set fixed mortgage pricing. Many major banks and building societies, including Barclays, HSBC, Lloyds Bank, Nationwide, NatWest, Santander, and TSB, have responded by raising their mortgage rates in multiple increments over recent weeks, reflecting growing inflation concerns and the increased cost of wholesale funding.

The surge in rates has had a dramatic impact on the availability of lower-cost mortgage deals. The number of fixed-rate mortgages offering interest rates below 5% has plummeted from 1,494 at the start of September to just nine currently, representing a 99% decline. This sharp reduction severely limits options for borrowers seeking affordable fixed mortgages in Great Britain.

Homeowners facing the end of their fixed-rate deals are expected to feel the strain most acutely. Analysis from the HomeOwners Alliance indicates that monthly repayments on a £250,000 mortgage at the current 6% rate could be around £158 higher than for a similar loan fixed earlier this year at around 4.94%. This equates to an additional £2,000 annually, posing a significant affordability challenge for many.

Industry figures have voiced concern about the broader impact of these changes. Ian Harris, president of the National Association of Estate Agents Propertymark, noted that buyers are highly sensitive to mortgage rate fluctuations and that the disappearance of sub-5% deals is likely to reduce purchasing budgets and could deter some buyers from entering the market altogether. He also highlighted the pressure higher repayments may place on homeowners contemplating a move.

Finance expert Rachel Springall of Moneyfacts described the recent rate hikes as “brutal” for borrowers. She advised those with fixed deals nearing expiration to start exploring their options promptly rather than waiting in hopes of future rate reductions. Meanwhile, Sarah Tucker from the HomeOwners Alliance urged borrowers not to panic but to be proactive in reviewing their mortgage plans amid rising monthly costs and other household expenses.

There are early indications that the housing market is feeling the effects, with Nationwide reporting that annual house price growth slowed to half its previous rate in September. The combination of rising borrowing costs and reduced mortgage choices is expected to continue exerting downward pressure on market activity in the near term.