Major mortgage lenders have increased rates for the second time this month. The move puts further pressure on buyer affordability ahead of the Bank of England’s next interest rate decision.
NatWest, Santander, HSBC, Lloyds Bank and TSB are among those to have repriced products again since the start of September.
Nationwide and other building societies have also started a second round of increases. Higher swap rates are feeding through to mortgage pricing.
The latest increases follow a sharp rise in borrowing costs since the spring.
The average two-year fixed mortgage rate stood at 5.73% on 15 September. It was 4.84% at the beginning of March.
That represents an increase of 0.89 percentage points in just over six months.
For somebody borrowing £250,000 over 25 years, Moneyfacts calculates that the increase adds around £131 to monthly repayments. That equates to an additional £1,572 a year.
Five-year fixes have also moved higher. The average rate has increased from 4.96% in March to 5.78%.
Meanwhile, the Moneyfacts Average New Mortgage Rate has reached 5.68%. It stood at 4.90% at the start of March and 5.59% in August.
The renewed increases could have implications for the property market. Mortgage affordability remains a key factor in buyer budgets and transaction activity.
Major banks reprice again
Rachel Springall, finance expert at Moneyfacts, said: “A second wave of mortgage rate hikes has begun from the major banks in reaction to growing concerns surrounding inflationary pressures.
“Swap rates have climbed above 4.70%, leading lenders such as NatWest, Santander, HSBC and TSB to increase selected fixed rates for the second time this month.
“It is highly likely other lenders will follow suit to adjust rates, and with some deals withdrawn from the market, it is expected any returning deals could well be priced higher.”
Springall said several building societies had also repriced for a second time, including Nationwide.
The increases underline how fixed mortgage pricing can move independently of Bank Rate. Lenders price fixed deals largely according to funding costs and expectations for future interest rates.
Moneyfacts said the average two-year fix is now at its highest level since June. The average five-year fix has returned to levels last seen in April.
A further 0.25 percentage-point increase would have a noticeable impact on repayments.
Moneyfacts calculates that a rise from 5.73% to 5.98% would add around £38 a month. The calculation is based on a £250,000 repayment mortgage over 25 years.
That represents another £456 a year.
Borrowers move early to secure deals
The volatility is also encouraging borrowers to arrange their next mortgage early.
FCA figures show 381,364 mortgages secured a new deal up to six months before maturity during the second quarter of 2026.
That followed 499,271 in the first quarter.
Meanwhile, around 750,000 households have fixed-rate mortgages expiring during 2026. They are currently paying rates below 3%, according to Bank of England estimates cited by Moneyfacts.
Many could therefore face higher repayments when they refinance.
Springall said: “The mortgage pain shows no sign of easing for those borrowers who cannot yet lock into a new deal, particularly those with a five-year fixed who are not due to refinance until 2027.
“Back in February 2022, there were sub-2% fixed mortgages available, so moving off this rate will be a huge shock for borrowers.”
She added that lenders and brokers should ensure borrowers understand the implications of switching early. These include any early repayment charges.
Moneyfacts said borrowers moving from an average standard variable rate could still make substantial savings by fixing.
The average SVR currently stands at 7.13%. On a £250,000 mortgage over 25 years, that equates to repayments of around £1,787 a month.
By comparison, repayments at the average two-year fixed rate of 5.73% would be around £1,569.
That is a difference of £218 a month.
