The Average Five-Year Fixed Mortgage Rate Hits 6%

This is not the Bank of England doing it. Rachel Springall of Moneyfacts put the cause plainly: “As wholesale funding costs climb on the back of rising gilt yields, fixed rate adjustments are somewhat inevitable” — and gilt yields rose again today, the ten-year adding about four basis points to 5.41%. Barclays has raised selected fixed rates four times in September alone; HSBC, Lloyds, Nationwide, NatWest, Santander and TSB three rounds each. In cash, a £250,000 loan over twenty-five years costs £1,611 a month at 6%, against £1,453 at February’s average of 4.94% — £158 more a month, or £1,896 a year, on the HomeOwners Alliance’s figures. Around half a million homeowners need a new deal before the year is out, and the Bank expects just over five million to be paying more by the end of 2028. Ms Springall called the three-year highs “disastrous news for borrowers”. Note what has not moved in step: sub-5% variable deals have gone only from 411 to 389, so the squeeze is specific to fixed pricing. It arrives in a month that has already brought a 4% rise in energy prices and diesel at a record £2 a litre, with a forecast 16% rise at the January cap. Watch the Budget on 28 October, and Nationwide’s finding that annual house price growth halved in September.