The average rate on a new five-year fixed mortgage has climbed to 6% for the first time since September 2023, pushing the cost of home borrowing to a three-year high and wiping out roughly 1,500 deals priced below 5% since the start of September. For the millions of households that refinance every two or five years, the repricing is immediate and unavoidable.
Lenders pass through funding costs
Moneyfacts data shows the average five-year fixed rate now sits at 6%, while two-year fixes average 5.98%, its highest level since December 2023. The increases reflect higher swap rates driven by international concern over inflation, interest-rate trajectories and government borrowing costs, with the Iran war adding a layer of geopolitical uncertainty. Barclays raised selected fixed rates four times in September alone; HSBC, Lloyds Bank, Nationwide, NatWest, Santander and TSB each moved three times.
The below-5% market has evaporated
The disappearance of 1,500 sub-5% deals in a single month illustrates how quickly the margin for borrowers has compressed. Fixed-rate borrowers are insulated until their term ends, but the vast majority of UK mortgages are on two- or five-year fixes, meaning a rolling wave of refinancing at materially higher rates is baked into the pipeline.
Advice is to lock early and compare
"Average fixed mortgage rates rising back to three-year highs will be disastrous news for borrowers," said Rachel Springall, finance expert at Moneyfacts. "Borrowers who were hoping mortgage rates would stabilise will be disappointed." She recommended that those nearing the end of a fixed term seek advice and compare deals carefully, noting that some lenders permit rate locks three months ahead while others allow six.