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Fixed mortgage rates continue to climb above 6% as choice of products improves

Average fixed mortgage rates are continuing to climb, pushing up costs for borrowers.

Earlier this week, the average two-year fixed-rate deal topped 6% for the first time in 14 years and the average five-year fixed rate hit 6% for the first time in 12 years, according to data from Moneyfacts.co.uk.

Moneyfacts said on Friday that, across all deposit sizes, the average two-year fixed-rate mortgage on the market is 6.16%, having edged up from 6.11% on Thursday and 6.07% on Wednesday.

The average five-year fixed-rate mortgage is now 6.07%, having been 6.02% on Thursday and 5.97% on Wednesday.

Many deals disappeared from the market amid the fallout from the recent mini-budget. Bank of England base rate hikes in recent months, amid soaring inflation, have also had an impact.

Moneyfacts previously calculated that, based on Thursday’s rates, someone with a £200,000 mortgage, paying it back over 25 years could end up paying around £5,000 per year more for a two-year fixed-rate deal than they would have done last December.

Across the market, the choice of mortgage products is gradually increasing after contracting sharply last week.

Moneyfacts counted 2,533 products on Friday, up from 2,430 on Thursday.

The total is still significantly down from 3,961 on the day of the mini-budget.

Tom Bill, head of UK residential research at Knight Frank, said: “We may see mortgage rates fall to some extent if financial markets become more reassured by the Government’s economic plan, but the events of the last fortnight have been a reminder that the era of ultra-low rates is coming to an end.”