UK Mortgage Rates Hit Five-Month High Ahead of BoE Decision

Mortgage rates in the UK are on the rise ahead of the Bank of England's interest rate decision this week. Over the past week, more than two dozen lenders have hiked their mortgage deals, with some big names like HSBC and Lloyds increasing their rates.

The average two-year fixed-rate mortgage has climbed to 5.67%, its highest level since June, while the five-year fix is at an April high of 5.72%. This surge in rates is largely driven by the re-pricing of swap rates, which are used as a benchmark for pricing fixed-rate mortgages.

Moneyfacts head of consumer finance Adam French warns that unless swap rates fall back significantly, borrowers should prepare for further mortgage rate increases in the weeks ahead. He notes that market expectations suggest other central banks, including the Bank of England, may also be forced to raise rates in response to inflationary pressures.