Mortgage Rates Rise as Market Concerns Grow Over Inflation and Base Rate

New figures from financial information provider Moneyfacts show that the average five-year fixed-rate mortgage has reached 6%, marking its highest level since September 2023.

The average two-year fixed rate has also climbed significantly and now stands at 5.98%, highlighting continued upward pressure across the mortgage market.

The latest figures follow a series of rate increases from many of the UK’s major high street lenders throughout September.

The rise in mortgage rates comes as financial markets react to the escalating situation in the Middle East and growing concerns over the potential impact of oil supply and prices on UK inflation.

Fixed-rate mortgage pricing is closely linked to movements in the financial markets. With markets increasingly anticipating that the Bank of England may need to raise the Base Rate further to tackle persistent inflationary pressures, the cost of funding fixed-rate mortgage products has also increased.

Jack, our Director, said:

“The mortgage market has taken a significant turn over the past month, with rates becoming increasingly expensive as the situation in the Middle East continues to develop.

Financial markets are now concerned that we could see further Base Rate increases than previously anticipated. This has pushed up the financial markets that lenders use to price their mortgage products, which has resulted in the increases we are seeing today.

As we have been advising clients for some time, it is important to review your mortgage as early as possible. There is no guarantee that rates will fall, and delaying a decision could leave borrowers exposed to further increases.

The good news is that the vast majority of lenders will allow a mortgage rate to be amended if rates improve between securing a product and the mortgage coming into effect. This means that securing a rate early can provide some protection while still allowing borrowers to benefit if market conditions improve.”