The average five-year fixed-rate mortgage on the market has breached 6% for the first time in 12 years.
Across all deposit sizes, two-year and five-year fixed rates now both stand at more than 6% on average, according to Moneyfacts.co.uk.
The typical five-year fixed-rate mortgage on Thursday was 6.02%, Moneyfacts said, having crept up from 5.97% on Wednesday.
The last time average five-year fixed-rate mortgages were at 6% was in February 2010, when the rate was 6.00%.
- Two years, 6.11%
- Five years, 6.02%
The average two-year fixed-rate mortgage stands at 6.11%, having breached the 6% mark on Wednesday, for the first time since November 2008.
Moneyfacts calculated the potential impact that rising rates could have for someone with a £200,000 mortgage, paying it back over 25 years.
Back in December 2021, the average two-year fixed mortgage on the market had a rate of 2.34%.
Someone with a £200,000 mortgage taking out a two-year deal at that time could have had monthly repayments of £881.20.
But on current average rates, their monthly mortgage repayments could be £1,302.08 – a difference of around £420 per month, or more than £5,000 per year.
Looking at someone in the same circumstances taking out a five-year fixed-rate mortgage, the average rate back in December 2021 was 2.64%.
This could have meant monthly payments of £911.40 for someone with a £200,000 mortgage taking out a deal at that time.
But now, someone could typically expect to be paying £1,291.05 per month if they took out a five-year deal now – a jump of just under £380 per month, or more than £4,500 per year.
A string of rises in the Bank of England base rate in recent months have pushed up borrowing costs generally, while volatile market conditions following the mini-budget prompted lenders to pull mortgage deals from sale and increase their rates. Swap rates, which lenders use to price their mortgages, have been increasing recently.
Having shrunk severely last week, the choice of mortgage products has been gradually increasing as lenders introduce new deals, according to Moneyfacts’ figures.
Some 2,430 mortgage deals were available on Thursday, which is up from 2,258 on Sunday, at the start of the week.
However, mortgage choice is still well down compared with the 3,961 products available on the day of the mini-budget.
