news for borrowers: the average rate on a new five-year fixed mortgage deal has hit 6% for the first time in three years. Rachel Springall of Moneyfacts said the rise back to three-year highs will be disastrous news for borrowers.
The average on five-year deals is now 6%, while two-year fixed mortgages average 5.98%. Moneyfacts said about 1,500 mortgage deals priced below 5% have vanished since the start of September.
Moneyfacts and September rates
Springall said borrowers hoping mortgage rates would stabilise will be disappointed. She also said people coming to the end of a fixed deal should be wise to seek advice and compare deals carefully, because some lenders allow a rate to be locked in three months before the current deal ends and others allow six months.
During September, Barclays increased selected fixed rates on four occasions. HSBC, Lloyds Bank, Nationwide, NatWest, Santander and TSB each made three rounds of fixed rate increases in the same month.
September 2023 levels
The new five-year average is at its highest since September 2023. Two-year fixed deals are at their highest since December 2023. Springall said the rises were inevitable because lenders' wholesale funding costs had climbed as a result of rising gilt yields.
The move leaves buyers and homeowners coming off fixed deals facing a smaller set of sub-5% options than they had earlier in the month. For anyone nearing the end of a fixed term, the practical step is to compare deals before the current rate expires, because the market has already moved again.
