UK mortgage interest rates surge past 6% to highest level for 14 years

The average rate on a two-year fixed mortgage has surged past 6% for the first time since the global financial crisis in 2008.

Highlighting the looming crisis facing the UK property sector, the average deal offered by lenders is now 6.07%, according to figures from Moneyfacts. This is the highest in 14 years.

The average five-year fixed mortgage stands at 5.97%, which was 2.55% just a year ago.

Fixed deal interest rates do not change during the term of the mortgage, meaning rates are quoted for new or renewing borrowers and stay the same during the period.

“Borrowers may well be concerned about the rise to fixed mortgage rates but it is essential they seek advice to assess the deals that are available to them right now," Rachel Springall of Moneyfacts, said.

"Fixing for longer may seem more appealing, particularly as both the average two- and five-year fixed rates rise to levels not seen in over a decade. Consumers must carefully consider whether now is the right time to buy a home or to wait and see how things change in the coming weeks."

Read more: Why have interest rates gone up and how will it affect your mortgage?

The figures affect first-time buyers and those looking to remortgage. An average of around 100,000 people a month are coming to the end of their current mortgage, and face a sharp rise in their monthly repayments.

Joshua Raymond, director at financial brokerage XTB, said: "We've seen a huge amount of upward pressure on mortgage rates in the past week(s) with providers re-assessing their products inline with heightened expectations of aggressive interest rate hikes to come from the Bank of England.

“A lack of available products whilst mortgage providers assess the debt market alongside heightened rate expectations are the two key factors driving the average two year mortgage rate to more than 6%.

“What we will likely see are borrowers moving to longer term deals but we do expect those rates to also see upward pressure so it's likely that borrowers will be facing higher mortgage costs regardless of whether they are renewing at short term or long term deals.”

Read more: How a sinking pound will inflate mortgage debt for millions

It comes as banks have pulled hundreds of mortgage products from the market in recent weeks as a result of market turmoil sparked by Kwasi Kwarteng’s tax-cutting fiscal plans.

The chancellor is set to meet with high street bank chiefs, including Barclays (BARC.L), Lloyds (LLOY.L) and NatWest (NWG.L), on Thursday to discuss the mortgage market.

Meanwhile, the chief executive of the City watchdog told The Sunday Times at the weekend that he wanted lenders to justify the withdrawal of fixed-rate mortgage products.

"If a product is withdrawn for a temporary period, we want to understand when they're going to come back to market so that those people who may need to refinance are able to proceed with their plans," Nikhil Rathi told the newspaper.

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