The average five-year fixed rate mortgage has hit its highest level since 2023, the latest data from Moneyfacts shows.
The rates scrutineer says the average five-year fixed rate hit 5.87 per cent today, the highest level since November 6, 2023.
Since early March this year, the average five-year fix has risen by almost 1 percentage point from 4.94 per cent to where it is today.
On a £200,000 mortgage being repaid over 25 years that means those taking out a home loan today are paying £111 more each month than they were six months ago.
All of the UK’s big six mortgage lenders have hiked rates this week, all for the second time since the start of September.
This is largely because of higher Sonia swap rates, which are used by lenders to price fixed-rate mortgages.
These have put pressure on funding costs amid volatility in financial markets.
Soaring high: Average five-year fixed rates have reached the highest levels since 2023 putting added pressure on household finances
While the Bank of England held interest rates today at 3.75 per cent, investors are now betting that rates will jump from the current rate of 3.75 per cent to 5 per cent by November next year.
Broker Rohit Kohli of The Mortgage Stop described what he sees as a ‘dark week for borrowers’.
‘Every one of the big six has now hiked, and some of those increases are big ones,’ said Rohit.
‘The inflation pressure is coming. With oil and energy costs where they are, I’d be surprised not to see a Bank of England rate rise by the end of the year, or early in the new year at the latest.’
Ross Lacey, director and independent financial adviser at Rayleigh-based Fairview Financial Management, warned people approaching the end of fixed deals not to wait for the market to settle.
‘Fixed-rate rises are happening across the board with most lenders,’ said Lacey.
‘Our advice to anyone coming up to six months before their current fixed rate deal ending is to speak with a broker and get something locked in as soon as possible.
‘That way they can protect themselves from future rate rises, but can also cancel and rebook a better deal if it comes up in the next six months.’
What rates should you expect to get right now?
Moneyfacts tracks the average fixed rate for the entire residential market, which includes more specialist deals such as for those with poor credit records.
In reality most borrowers will be able to do much better than the average rate depending on their circumstances and what level of deposit or equity they have in their home.
The lowest five-year fixed rate for those with a 40 per cent deposit is currently 4.72 per cent with HSBC, albeit it requires people to have a premier current account with the bank.
More widely available is a 4.77 per cent five-year fix with Barclays for those remortgaging or a 4.74 per cent deal with First Direct for those buying.
Households with smaller levels of equity in their home or buyers with smaller deposits may struggle to bag a rate below 5 per cent now.
Brokers are warning that these sub-5 per cent rates are vanishing at alarming speeds at present.
Someone remortgaging with 20 per cent equity in their home – essentially needing a mortgage to cover 80 per cent of their home’s overall value – can get a lowest rate with Coventry Building Society at 5.14 per cent with a £999 fee.
Those buying with a 20 per cent deposit can do better. First Direct is offering a 4.94 per cent rate with a £490 fee to home buyers and Coventry is offering a 4.96 per cent deal.
