More misery for homeowners as average rate for a five-year fixed mortgage reaches 6%

4 July 2023, 10:36

The average 5-year fixed mortgage rate has increased to more than 6%
The average 5-year fixed mortgage rate has increased to more than 6%. Picture: Alamy

By Kit Heren

The average five-year fixed-rate mortgage rate has risen to 6.01%, according to a financial information company, piling more misery on people looking to buy a house or renew their deals.

Listen to this article

Loading audio...

The average two-year fixed rate mortgage has increased to 6.47%, Moneyfacts said.

On Monday, the previous average for a five-year mortgage was 5.97%, while the two-year deal was 6.42%.

Five-year fixes are at the highest rate since November 2022, when Liz Truss' mini-budget sent markets into a frenzy.

It comes as the Bank of England raised interest rates yet again to 5% in June, the 13th straight hike - taking the base rate to its highest level in 15 years.

The Bank said higher inflation, especially services inflation, meant it had to act faster to bring prices under control.

Read more: Keir Starmer tells PM to 'locate his nerve' as nation grapples with soaring interest rates and mortgage costs

Read more: Changes to mortgages announced to help households struggling with soaring interest rates

'How exactly do you expect me to hold my nerve?': Caller confronts Minister on mortgage rates

Inflation didn’t change in May, remaining at 8.7% despite supermarkets boasting of price cuts for certain products.

Mortgages can be fixed-rate, meaning the borrower has to pay a set amount every month over the course of the two or five years, or they can be on a tracker - meaning the amount usually goes up and down with the Bank of England's base rate.

Most homeowners in the UK are on fixed-rate mortgages. 2.4 million of those deals will run out before the end of 2024, according to UK Finance, the banking industry trade body.

A series of measures were announced last week to help people cope with mortgage repayments.

Caller brands government intervention on mortgage hikes 'spoonfeeding'

Banks met the Chancellor and agreed there will be a minimum 12 month period before a home is repossessed.

Read more: Speak to your lender: Minister’s message to Brits struggling with mortgages as he says inflation will come downRead more: Changes to mortgages announced to help households struggling with soaring interest rates

Borrowers will also be able to make a temporary change to their mortgage terms, for example by switching to an interest-only deal, then will be able to return to their original deal within six months without impacting their credit scores.

Chancellor Jeremy Hunt hailed the "important" agreements with banks and lenders."There are two groups of people that we are particularly worried about.

The first are people who are at real risk of losing their homes because they fall behind in their mortgage payments," he said.

"The second are people who are having to change their mortgage because their fixed rate comes to an end, and they're worried about the impact on their family finances of higher mortgage rates."

The three measures:

  • Speaking to your bank if you are struggling has no impact on credit score
  • Change to interest only or extend mortgage term - for six months no questions asked
  • Minimum 12-month period before repossessions can occur

More Latest News

See more More Latest News

Gladiators star Zack George, known as Steel, has revealed that his baby son has died.

Gladiators star reveals heartbreaking loss as baby boy dies days after being born prematurely

Boy, 15, and girl, 13, guilty of manslaughter following the death of Leicester pensioner Bhim Kohli

Bhim Kohli's teenage killers 'humiliated' pensioner in 'brutal and cruel' attack, says heartbroken daughter

Close up of a Police logo on a police officers uniform in Leeds,WEst Yorkshire,UK

Norwegian teenager arrested after being caught with guns in Yorkshire hotel room

x

UK should not 'jump in with both feet' to retaliate against Trump trade tariffs, PM urges

Wahib

'Jealous and controlling husband' who tried to cut wife's head off before leaving her to bleed to death jailed for life

Ashbourne Derbyshire England UK.

Two dead after aircraft crash in Derbyshire, as police tell public to avoid the area

The Government must “invest in childhood” or risk losing the next generation to poor mental health, a charity has warned.

Invest in childhood ‘or risk losing a generation to poor mental health’, charity warns

US-ECONOMY-MARKET-STOCKS

Relief for financial markets as stocks rebound from historic losses days on from tariff turmoil

XL Bullies Being Walked On Private Land After Ban

XL Bully mauled two people after being ordered to ‘kill’ by owner as victims left with 'horrific injuries'

Kerri Pegg, former governor of HMP Kirkham,

Prison governor guilty of misconduct after relationship with drug boss 'Jesse Pinkman' who gifted her £12k Mercedes

Emergency services search for survivors after the ceiling collapsed in Dominican Republic

At least 44 killed after nightclub ceiling collapses in Dominican Republic as desperate hunt for survivors launched

Westfield Stratford City shopping center, London England United Kingdom UK

Two teenage boys charged after seat thrown from third floor of Westfield shopping centre

Elton John and Madonna 'bury the hatchet' after decades-long feud

Elton John and Madonna 'bury the hatchet' after decades-long feud

Zelenskyy shared the video of the alleged Chinese soldier on Telegram

Two Chinese soldiers captured fighting in Ukraine - and Zelenskyy says he wants US and Europe to respond

Ahmad Mamdouh Al Ibrahim was fatally stabbed in Huddersfield

Boy, 16, fatally stabbed in Huddersfield was refugee who fled Syria and dreamed of becoming doctor

Yossi Benayoun

Former Premier League star 'survives grenade attack on home'