Finance05 October, 20263 min read
Average Five-Year Fixed Mortgage Rate Hits 6% For First Time In Three Years
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The average five-year fixed mortgage rate rose to 6.00%, first time since September 2023. About 1,500 fixed-rate mortgages priced below 5% have disappeared since early September.
6 outlets told this the same way.
Rates jump to 6%
Moneyfacts said the average interest rate on a new five-year fixed mortgage deal hit 6% for the first time in three years, with the average rate on five-year deals now at 6% and the average rate on two-year fixed mortgages at 5.98%. Moneyfacts said the number of fixed-rate deals priced below 5% vanished by 99%, from 1,494 since the start of September 2026 to nine now, leaving borrowers with far fewer cheaper options. Rachel Springall, finance expert at Moneyfacts, said, "Average fixed mortgage rates rising back to three-year highs will be disastrous news for borrowers."
Springall said borrowers who were hoping mortgage rates would stabilise will be disappointed, and she urged people coming to the end of a fixed deal to seek advice and compare deals carefully. The BBC said the rise in mortgage costs has been driven by lenders facing higher costs amid international concern over rising prices, interest rates, and government borrowing costs.
Swap rates squeeze deals
The Guardian said volatility in the bond markets has driven up the swap rates that affect the pricing of fixed-rate mortgages, even as the Bank of England base rate had seen no change since December last year. Rachel Springall said the impact on rates had been "brutal" as lenders put up prices and borrowers saw their choice of fixed-rate mortgages costing below 5% shrink to only nine options. Ian Harris, president of the estate agents’ body NAEA Propertymark, said members were "seeing first-hand how sensitive buyers are to mortgage rates" and that the rapid disappearance of sub-5% deals would add further pressure to affordability.
This pressure showed up in calculations from HomeOwners Alliance, which the Guardian said indicated a monthly cost of a £250,000 loan fixed at 6% for five years that was £158 higher than the same-sized loan locked in at 4.94%. The Guardian said higher mortgage costs were already weighing down the housing market, with Nationwide reporting that annual price growth had halved in September.
Households face higher bills
This shift in mortgage pricing left homeowners and buyers approaching the end of existing fixed-rate arrangements with far fewer cheaper options, as GB News said almost 1,500 fixed-rate mortgages priced below 5% had disappeared since the beginning of September. GB News said the average five-year residential mortgage rate climbed from 5.98 per cent on Friday to 6 per cent on Monday, and it said the average two-year fixed mortgage rate was closing in on the milestone at 5.98 per cent. Ian Harris warned that even modest rises in monthly repayments could force some purchasers to scale back their budgets or abandon transactions entirely, and he stressed that realistic pricing and thorough financial preparation had become more critical than ever.
This squeeze also showed up in This is Money’s comparison, which said a five-year mortgage on the same terms would have seen the average rate increase from 4.94 per cent to 6 per cent, raising annual payments by £1,896. This is Money said homeowners could face paying £2,000 more per year for their mortgage now than they would have if they fixed in February, as lenders continued to hike prices on inflation concerns.