UK Mortgage Rates Hit Three-Year High as Swap Rates Rise

Average mortgage rates in the United Kingdom have climbed to a three-year high, with five-year fixed rate deals reaching 5.92% and two-year fixed residential rates hitting 5.88%. These increases stem from rising swap rates and expectations that the Bank of England will raise interest rates due to global inflation and oil price volatility linked to conflict in the Middle East.

Moneyfacts Group reports that typical borrowers on two-year fixed mortgages are now paying approximately £150 more per month than they would have at the start of the year. Rachel Springall of Moneyfacts noted that some major brands implemented rate hikes for the second time this month to keep pace with swap rates.

Industry data from UK Finance indicates that 1.8 million fixed-rate deals are scheduled to end by the close of the year. This has triggered a surge in borrowers contacting brokers up to seven months in advance to mitigate the impact of payment shock as they transition to higher rates.