Average 5-Year Fixed Mortgage Rate Reaches 6%, a Three-Year High
Moneyfacts figures show the typical five-year fixed home loan now costs 6%, as lenders face higher funding costs and fewer cheaper deals remain.
Borrowers taking out a new five-year fixed mortgage now pay 6.00% on average. That is the first time it has been this high in three years, according to figures from the financial information firm Moneyfacts, reported by The Guardian and the BBC.
The Guardian reported that the typical two-year fixed rate sits just under that, at 5.98%. That is its highest level since December 2023.
Both outlets say lenders have been raising prices in recent weeks. The Guardian says turmoil in global bond markets has made it more costly for lenders to offer loans, and has raised expectations of a base rate rise. The BBC says people around the world are concerned about the cost of goods, interest rates and what governments pay to borrow money.
The BBC reported that, according to Moneyfacts, roughly 1,500 mortgage products with rates under 5% have been withdrawn since September began. Moneyfacts called the situation brutal for borrowers.
Interest rates are rising in other places too. A Wealth of Common Sense, a markets blog, noted on September 27 that high-quality bonds were yielding about 5% and cash about 4%, which shows how widely borrowing and saving rates have moved.
Key facts
- The average five-year fixed mortgage rate is 6.00%, its highest since September 2023, per Moneyfacts.
- About 1,500 deals priced below 5% have gone since early September, per the BBC.
- The Guardian links the rise to bond market turmoil and expectations of a base rate rise.
- On September 27, a markets blog pointed out that high-quality bonds were yielding 5% and cash was yielding 4%.
Why it matters
Mortgage rates change how much a home costs each month, both for first-time buyers and for people whose fixed deal is ending. Higher rates on loans often come with better returns on savings and bonds, so the picture is mixed. Markets move up and down, so rates can change again.
What happens next
The Guardian says expectations of a base rate rise are building, which could keep lenders' prices under pressure. The notes do not say when rates may change.
Sources
- Average five-year fixed mortgage rate hits 6% for first time in three years – The Guardian
- Average five-year mortgage rate hits 6% for first time in three years – BBC Business
- Strange Times – A Wealth of Common Sense
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