Borrowers left disappointed as mortgage rates rise for first time in eight months
Every Friday, we take an overview of the mortgage market with industry experts and round up the best rates with Moneyfactscompare.co.uk.
Mortgage rates ticked up for the first time in eight months this week.
Average rates on two- and five-year fixed plans rose by 0.02%, to 4.98% and 5.02% respectively.
The last month-on-month rate rise was recorded at the start of February 2025.
Product choice overall fell month-on-month, to 6,998 options.
But those hoping to buy with a 5% or 10% deposit had the highest number of deals to choose from in 17 years, with 1,362 options on the market.
What’s caused the rise?
Adam French, head of news at Moneyfacts, said volatile swap rates, which are used by lenders to set rates for borrowers, are to blame for the abrupt end to cuts.
“Many borrowers will be disappointed to see mortgage rates on the rise. Uncertainties surrounding the outlook for interest rate moves have been evident for several weeks, with volatile swap rates prompting a cautionary approach among lenders,” he said.
“Now many will be waiting with bated breath for the budget. This waiting game, alongside forecasts for inflation to remain above target, makes it less likely the Bank of England will make further rate cuts this year.”
Who are the winners and losers?
The upward trajectory of mortgage rates will “rub salt in the wounds” for homeowners looking to remortgage – especially if they are coming off a five-year fix from historic low rates seen in 2020.
French said borrowers with a £200,000 total loan amount repaid over 25 years on a capital repayment basis, coming off a 5-year fix, may need to find an extra £260 per month when they come to remortgage.
Here are the lowest remortgage rates on the market…
As a remortgage customer, it’s possible you are looking to save on the upfront cost of any deal, so a best buy mortgage could be the most cost-effective choice in this instance…
On the other hand, homeowners with the same borrowing needs coming off a two-year fix deal stand to save around £200 per month with average rates almost 1.5% lower than this time two years ago.
Higher rates, combined with the prospect of higher taxes and tighter regulations, have hit landlords particularly.
Property firm Hamptons has warned that new landlords are becoming an “endangered species” across the South, with big stamp duty bills and flatlining prices pushing investors up North.
The North East of England was the hotspot for buy-to-let owners in the third quarter of this year, according to a report by Hamptons.
It has estimated 28.4% of homes sold in the North East were bought by a landlord, compared with 8% in London, 7.1% in Scotland and 6.9% in Wales.