UK Five-Year Fixed Mortgage Rates Hit Three-Year High of 6%
Average five-year fixed mortgage rates in Great Britain have reached 6% as lenders raise costs amid global bond market volatility.
The average five-year fixed-rate mortgage in Great Britain has reached 6%, marking a three-year high. According to Moneyfacts, the average two-year fixed rate has similarly climbed to 5.98%. This trend follows a sharp contraction in affordable options, with the number of fixed-rate deals priced below 5% plunging 99% from 1,494 at the start of September to only nine.
Major lenders, including Barclays, HSBC, Lloyds Bank, Nationwide, NatWest, Santander, and TSB, implemented multiple rate increases throughout September. These hikes are driven by rising gilt yields and volatility in global bond markets, fueled by economic uncertainty surrounding the Iran war. These factors have increased wholesale funding costs for lenders, which are then passed to consumers.
The surge in borrowing costs is already impacting the housing market. Nationwide Building Society reported that annual house price growth halved in September. Advocacy groups and industry bodies warn that these increases, coupled with rising energy and fuel costs, will severely diminish affordability for new buyers and homeowners renewing existing deals.
