Mortgage rates have risen sharply, with the average five-year fixed rate reaching 6% for the first time in three years. If your deal ends in the next six months, it’s important to act early.

The average five-year fixed mortgage rate has climbed to 6%, its highest level since September 2023, according to figures from Moneyfacts. The average two-year fixed rate has also increased to 5.98%.

The rises have been driven largely by higher swap rates – the financial market rates lenders use when pricing fixed-rate mortgages. As lenders’ funding costs have increased, many of the UK’s major banks and building societies have raised their mortgage rates, some several times during September.

The number of competitively priced deals has also fallen significantly. Excluding mortgages available only in Northern Ireland, the number of fixed-rate products below 5% dropped from 1,494 at the beginning of September to just nine by 5 October.

What should borrowers do?

‘The rise in average five-year fixed mortgage rates to 6% is understandably going to concern borrowers, particularly those coming towards the end of a much cheaper fixed-rate deal,’ says MB Associates’ Sales & Operations Director Les Pick.  ‘It’ s important not to panic. These are average rates across the market and many borrowers, particularly those with good levels of equity, may still have access to more competitive deals.’

It is important to remember that the rate available to you will depend on several factors, including:

  • The size of your deposit or the equity in your property
  • Your income and overall affordability
  • Your credit history
  • The type and length of mortgage you choose

If you’re concerned about your fixed deal ending and having a much higher interest rate, there are a number of things you may be able to do. Depending on your circumstances, you might be able to switch to an interest-only mortgage or extend your mortgage term. During difficult times, good advice from an experienced mortgage broker is key. 

‘The key message is to start looking early,’ adds Les. ‘If your mortgage deal ends within the next six months, speaking to a broker now could allow you to secure a new rate well ahead of your current deal expiring. Importantly, securing a deal today doesn’t necessarily mean you are stuck with it. A good mortgage broker will continue monitoring the market and, if rates improve before completion, look to move you onto a better deal where possible.

Exploring your mortgage options

Les adds: ‘For borrowers worried about a significant increase in their monthly payments, there may also be other options, including extending the mortgage term, considering interest-only where appropriate, or looking at tracker and variable products.

Dealing with the situation early also gives you time to plan. ‘Mortgage rates can change extremely quickly in volatile markets,’ says Les. ‘Getting advice early gives borrowers more time, more options and, most importantly, a clear understanding of what their future mortgage payments could look like. If you are worried about your situation, please reach out to us, and we will start to build out a suitable plan looking at all options available to you.’

Variable and tracker mortgages may also be worth considering in some circumstances, particularly where they offer flexibility and don’t include early repayment charges. However, payments can increase if the Bank of England base rate rises, so they may not suit everyone.