LONDON / RankWire.AI / – UK mortgage costs rose again in early October as average five-year fixed rates reached 6.00%. That marked their highest level since September 2023. Average two-year fixed rates also climbed to 5.98%, the highest since December 2023. Moneyfacts recorded the increase after a series of lender repricing moves during September. The rise has left borrowers with far fewer fixed-rate products below 5%. Mortgage pricing has changed quickly across the market during recent weeks.
The number of fixed mortgage deals below 5% fell to just nine by October 5. Almost 1,500 such products were available at the start of September, excluding offers limited to Northern Ireland. Several large lenders increased selected fixed rates repeatedly during the month. Barclays changed some prices four times. HSBC, Lloyds Bank, Nationwide, Santander and TSB each raised selected rates three times. Those moves reduced the range of lower-priced fixed mortgages available to home buyers and people refinancing existing loans.
Borrowers can still access rates below the market average in some parts of the mortgage market. Larger deposits and lower loan-to-value ratios generally provide access to cheaper pricing. On October 1, average five-year fixed rates stood at 5.60% for borrowers at 60% loan-to-value. The average rose to 6.30% for mortgages at 95% loan-to-value. That difference shows how deposit size continues to affect borrowing costs. Moneyfacts also listed some leading five-year fixed products below 5%.
Bank Rate stays unchanged while fixed mortgage pricing rises
The Bank of England kept Bank Rate at 3.75% at its September policy meeting. Six members voted to leave rates unchanged, while three backed a quarter-point increase. UK consumer price inflation reached 3.1% in August. That remained above the central bank’s 2% target. The Bank of England said short-term market interest rates had risen during the period. It also said higher market rates were feeding through to borrowing costs for households and businesses.
Fixed mortgage rates do not follow Bank Rate alone. Lenders also consider swap rates and other wholesale funding costs when setting prices. Those market measures moved higher during September and affected fixed mortgage offers. Variable-rate products showed a smaller decline in availability below 5%. There were 389 variable deals under that level on October 5. At the start of September, the market offered 411. The latest figures show a wider gap between fixed and variable pricing conditions.
Mortgage approvals ease as higher borrowing costs reach households
Official lending data also pointed to softer activity in the UK housing market during August. Mortgage approvals for house purchases fell to 54,900 from 55,900 in July. Remortgage approvals declined to 34,000 from 34,600. Net mortgage borrowing increased to £4.4 billion from £4.1 billion. However, that remained below the previous six-month average of £5.2 billion. The effective interest rate on newly drawn mortgages rose to 4.60% from 4.45% in July. Gross secured lending fell to £23.6 billion.
The latest mortgage figures leave borrowers facing higher average fixed rates and fewer low-cost deals. Five-year fixed mortgages now average 6.00%, while two-year products average 5.98%. Buyers with larger deposits continue to receive lower average pricing than borrowers with smaller deposits. Mortgage approvals have also declined from recent levels as borrowing costs increased. Lenders can change product prices frequently as funding conditions move. The current market therefore combines higher fixed-rate averages with a much smaller pool of deals priced below 5%.