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HomeEconomyThe average five-year fixed mortgage rate exceeds 6%

The average five-year fixed mortgage rate exceeds 6%


The typical five-year fixed mortgage rate falls back more than 6% for the first time since November as lenders anticipate more Bank of England rate hikes

  • The average five-year fixed rate is now 6.01% according to Moneyfacts
  • The two-year fixed rate is now 6.47% after topping 6% last month

The average interest rate for a five-year fixed mortgage has topped 6 percent for the first time since the fallout from the mini-Budget in November, according to the latest data.

Borrowers who get a five-year fixed rate will now pay 6.01 percent on average, according to Moneyfacts, up from 5.97 percent yesterday.

Before the mini-budget, the last time rates had been this high was December 2008.

A month ago, the average rate was 5.41 percent, but interest has continued to rise as the Bank of England is expected to continue raising its base rate through at least the end of the year.

Rising: Mortgage rates have reached a new milestone as the five-year average fix tops 6% for the first time this year

Rates rose sharply last fall in the wake of then-Prime Minister Liz Truss’ disastrous mini-budget, but fell in the first half of 2023.

However, a combination of stubbornly high inflation with a strong labor market has led the Bank of England to prolong this cycle of rate hikes.

Across all deposit sizes, the average two-year fixed rate is now 6.47 percent, up from 5.72 percent on June 5.

On June 22, the Bank’s Monetary Policy Committee voted to raise the base rate by 0.5 percent to 5 percent, its 13th consecutive hike.

The expectation of further increases means more pain for mortgage borrowers.

About 1.4 million fixed-rate mortgage holders need to remortgage this year and will face a mortgage shock as they sign up for much higher rates than their current loan.

Justin Moy, managing director of broker EHF Mortgages, said: ‘There are still plenty of sub-6 per cent five-year deals currently available for buy-to-let and residential borrowers.

“However, the trend is worrying and swift action is essential to secure a new agreement. With more lenders offering an option up to six months before the expiration of your current contract, it is very important to hire a mortgage broker to see what is available and be ready to make a quick decision.’

Moy adds that there are still a number of loyalty offers for product transfers that are much cheaper than average fees. For example, Nationwide offers existing customers a flat 5.14 percent for 5 years.

This variety is also reflected in the average rates of the different capital sizes. For a five-year fixed rate on 60 percent of the home’s equity, the current average rate is 5.76 percent.

Last month, the government and mortgage lenders announced a package to help borrowers with rising costs, including repossession protection for a year and the ability to move to an interest-only agreement for six months without affecting credit scores. .

However, lenders are scrambling to familiarize themselves with the details of the new ‘mortgage letter’ that leaves mortgage holders in limbo.

Santander, Virgin Money and Lloyds are among the lenders currently implementing the letter. Others include HSBC and Barclays.

What to do if you need a mortgage

Borrowers who need to find a mortgage because their current fixed rate agreement is coming to an end, or because they have agreed to purchase a home, should explore their options as soon as possible.

This is the best Money Mortgage Rate Calculator powered by L&C that can show you offers that match the value of your mortgage and property

What if I need to re-mortgage?

Borrowers should shop around and talk to a mortgage broker and be prepared to act to secure a rate.

Anyone with a fixed rate agreement that ends within the next six to nine months should consider how much it would cost to remortgage now and consider closing a new agreement.

Most mortgage deals allow fees to be added to the loan and are then only charged when you withdraw. By doing this, borrowers can lock in a rate without paying expensive setup fees.

What if I am buying a house?

Those with agreed home purchases should also aim to lock in rates as soon as possible, so they know exactly what their monthly payments will be.

Homebuyers should be careful not to stretch themselves too far and be prepared for the possibility of house prices falling from their current high levels, due to higher mortgage rates limiting people’s borrowing capacity.

How to Compare Mortgage Costs

The best way to compare mortgage costs and find the deal that’s right for you is to talk to a good broker.

You can use our best mortgage rate calculator to display offers that match your home value, mortgage size, term, and fixed rate needs.

Keep in mind, however, that rates can change quickly, so the advice is if you need a mortgage, compare rates and then speak to a broker as soon as possible, so they can help you find the right mortgage for you. .

> Consult the best fixed-rate mortgages that you could apply for

Merry C. Vega is a highly respected and accomplished news author. She began her career as a journalist, covering local news for a small-town newspaper. She quickly gained a reputation for her thorough reporting and ability to uncover the truth.

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