Major UK mortgage lenders raising rates pushed the average five-year fixed residential mortgage rate to 5.68% today. The average two-year fixed rate also climbed, and borrowers chasing fixed deals now face fewer products and higher pricing at the same time.
5.68% is up from 5.64% on the previous working day, while the average two-year fixed rate rose to 5.63% from 5.60%. Moneyfacts said available residential mortgage products fell to 7,485 from 7,618 on Friday, leaving buyers with 133 fewer options as lenders repriced deals.
Rachel Springall on swap rates
5-year swap rates rose above 4.52% this week to their highest level since October 2023, and Rachel Springall said major lenders were under pressure to adjust pricing. Fixed-term mortgages are priced off swap rates, the wholesale borrowing cost lenders use to set deals, so a move higher there feeds into retail pricing with little delay.
“The pricing margins among major lenders are under pressure due to renewed volatility in the swap rate market, so it is somewhat inevitable for them to adjust rates.” Major lenders, which include HSBC and NatWest, have increased rates since the start of September, and Moneyfacts said some mortgage products had been pulled from the market by lenders keen to reprice them.
HSBC and NatWest since September
Since the start of September, HSBC and NatWest have both raised rates, showing the repricing is not limited to a single lender or a short-lived move. That matters for borrowers comparing offers across the market, because a rising average can reflect both higher list prices and fewer deals left on sale.
5% on the UK 10-year gilt yield adds another layer of pressure, with Rachel Springall linking the recent move to a global bond sell-off and higher wholesale funding costs. In practice, that can narrow the gap between the cheapest fixed deals and the rest of the market, especially when lenders pull products before replacing them.
Middle East hit versus mini-Budget
“However, the hit to the mortgage market over recent days pales in comparison to when the conflict in the Middle East began around six months ago, when many lenders pulled fixed rate deals.” Springall also said withdrawals and rate hikes have been nowhere near the scale seen after the mini-Budget in 2022, which gives borrowers a rough benchmark for how severe this round of repricing still is.
For anyone shopping now, the immediate problem is choice: the product count fell by 133 in a day, and some lenders are still repricing rather than widening their shelves. The cleanest move is to compare offers quickly and treat any fixed-rate quote as time-sensitive, because the direction of travel has been higher, not lower.
