Five-year fixed mortgages break 6% barrier as lenders keep pushing rates higher

Mortgage rates have broken through the 6 per cent barrier for the first time in three years, as lenders continue to hike prices on inflation concerns. The typical five-year fixed rate is now 6 per cent, according to rates scrutineer Moneyfacts, its highest since September 2023. Two-year rates are not far behind at 5.98 per cent, the highest level since December of that year. Those with more equity in their homes can still get rates below 5 per cent, though these are also fast disappearing. Moneyfacts says 99 per cent of sub-5 per cent mortgages have vanished from the market since the beginning of September. There were 1,500 available and now there are nine, excluding deals only available in Northern Ireland. Storm brewing: Homeowners needing to remortgage will be hit with higher rates as lenders put up prices due to fears the Bank of England base rate will riseVirtually all major lenders have hiked mortgage rates in recent weeks. Barclays increased selected fixed rates on four occasions, while HSBC, Lloyds Bank, Nationwide, NatWest, Santander and TSB each made three rounds of hikes. Variable deals, such as trackers, are still widely available below 5 per cent. These follow the base rate and the likelihood is that will rise and so will their payments. Rachel Springall, finance expert at Moneyfacts, said: 'Average fixed mortgage rates rising back to three-year highs will be disastrous news for borrowers. 'Those coming to the end of a fixed deal would be wise to seek advice and compare deals carefully, particularly as borrowers could secure a new deal a few months before their existing mortgage ends.'Why are mortgage rates rising? At the beginning of the year, most borrowers were able to get rates below 4 per cent with two-year fixes going as low as 3.5 per cent.The Bank of England was forecast to cut the base rate of interest throughout 2026 because inflation was on a downward trajectory. Cutting the base rate reduces borrowing costs for lenders and would result in mortgage rates falling. However, the escalation of hostilities in the Middle East and resulting rises in energy costs have led to fears of higher inflation being stoked once again. While the Bank of England held base rate at 3.75 per cent in September, the sixth consecutive hold since December 2025, it is now anticipated that it will raise interest rates. The idea is that this would stem inflation, by making it more expensive to borrow and encouraging people to spend less.Investors are now betting that rates will jump from the current rate to 4.75 per cent by this time next year and potentially as high as 5 per cent. Bond yields, in other words the returns on Government borrowing, have also been rising sharply due to inflation, rising public sector debt and concerns about Chancellor John Healey's upcoming Budget.This matters for mortgage holders because bond yields also heavily influence mortgage rates.What should you do if you need a new mortgage? Experts predict that mortgage lenders will continue to raise rates in the weeks ahead. Borrowers who need to remortgage in the next few months are being urged to fix now and lock in a lower rate.Some lenders allow remortgage customers to secure a new deal six months in advance, while for others it is three. Customers can usually switch to a different deal if rates fall in the meantime. David Hollingworth, associate director at broker L&C Mortgages and This is Money's mortgage agony uncle, said: 'Barclays' latest move highlights just how quickly the mortgage market can change.'Rising funding costs are putting pressure on lenders which may lead to further repricing in the weeks ahead. Borrowers who are considering fixing would be wise to act sooner rather than later.'Rates can be pulled from the market with little or no notice, so securing an option now offers protection against further upward pricing movements, while retaining the flexibility to switch if conditions become more favourable before completion.'It is a good idea to consider rates from different banks and building societies, and not just stick with your existing lender. They may not have the best deal at the precise time that you need to remortgage. Consulting a mortgage broker can help with this. They are often fee-free for customers as they charge fees to the lender they take a mortgage out with instead. When choosing a mortgage, it is also vital to consider any arrangement fees you'll be charged. These will push up the overall cost of the mortgage, especially if you roll them into the balance of the loan. A higher rate with no fee could therefore end up being cheaper in the long term than a low rate that charges £1,000-plus in fees. Check rates based on house price and loan size with our mortgage calculator How to find a new mortgage Mortgage rates have jumped as conflict with Iran has driven up inflation expectations and dashed hopes of interest rate cuts.If you need a mortgage because you are buying a home, or your current fixed rate deal is due to end, you should explore your options as soon as possible. This is Money has a long-standing partnership with fee-free broker L&C, to provide you with expert mortgage advice.Use This is Money and L&Cs best mortgage rates calculator to show deals matching your home value, mortgage size, term and fixed rate needs.Or use L&C’s online Mortgage Finder to search thousands of deals from more than 90 different lenders to discover the best deal for you.Mortgage service provided by London & Country Mortgages (L&C), which is authorised and regulated by the Financial Conduct Authority (registered number: 143002). The FCA does not regulate most Buy to Let mortgages. Your home or property may be repossessed if you do not keep up repayments on your mortgage