UK mortgage rates surge to three-year high as housing market feels the pinch

The average rate for five-year fixed mortgages in the UK has climbed to 6% for the first time in three years. This surge, driven by instability in money markets, has made loans more expensive for lenders to provide. According to Moneyfacts, the average two-year fixed rate is also near a three-year high at 5.98%.

Turmoil in global bond markets has led major banks and building societies to raise mortgage prices, even though the Bank of England’s base rate has remained unchanged since December 2025. The number of fixed-rate mortgages priced below 5% has plummeted by 99%, from 1,494 options at the start of last month to just nine.

Finance expert Rachel Springall from Moneyfacts described the impact on rates as "brutal." She warned that rising mortgage rates will be devastating for borrowers who expected costs to stabilize. Those finishing existing fixed-rate deals or hoping to buy property will face higher monthly payments. A £250,000 loan at 6% costs £158 more per month than the same loan at the average rate of 4.94% in February.

The housing market is already feeling the strain. Nationwide building society reported that annual price growth halved in September. Ian Harris, president of NAEA Propertymark, noted that buyers are highly sensitive to mortgage rate changes, which could force them to reduce budgets or abandon purchases.