Average five-year mortgage rate reaches 6%

The average five-year fixed residential mortgage rate reached 6% on October 5, its highest level in about three years, as lenders faced rising costs in financial markets. Moneyfacts reported the average had increased from 5.98% on Friday. The average two-year fixed rate stood at 5.98%, its highest since December 2023. The rise follows weeks of repricing by lenders as market funding costs and inflation concerns have increased. Swap rates, which reflect market expectations for future interest rates and help lenders set fixed mortgage prices, have risen. Major lenders have repeatedly increased some fixed-rate offers. Barclays made four rounds of selected increases, while HSBC, Lloyds Bank, Nationwide, NatWest, Santander and TSB each made three, according to reports. The number of fixed mortgage deals below 5% has also fallen sharply. Moneyfacts counted nine such options in Great Britain on October 5, down from 1,494 at the start of September; that count excludes deals available only in Northern Ireland. Including those products, Moneyfacts counted 107 options, compared with 1,691 at the start of September. The totals differ because they cover different geographic scopes.