Five-year mortgage rates in Great Britain reach 6% amid bond market turmoil
The average five-year fixed mortgage rate in Great Britain has reached 6% for the first time in three years, as turmoil in bond markets pushes up the costs lenders face. The rise is likely to increase pressure on household budgets and housing affordability, particularly for people whose existing fixed deals are ending or who are hoping to buy a home.
Moneyfacts reported an average five-year rate of 6%, its highest since September 2023, and a two-year average of 5.98%, the highest since December 2023. The number of fixed-rate deals below 5% has fallen from 1,494 at the start of last month to nine. A £250,000 loan fixed at 6% for five years costs £158 more a month than at 4.94%, the average rate at the start of February; housing market data has also shown annual price growth slowing.
- Five-year fixed mortgage rates have reached 6%.
- Only nine deals below 5% remain.
- A £250,000 loan costs £158 more monthly than at February’s average rate.
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A mortgage is a loan used to buy a home, with interest rates that determine your monthly payment. When mortgage rates rise, people buying homes or renewing existing deals face higher monthly payments, which affects household budgets and how much home people can afford.
Mortgage rates follow what happens in the bond market, where financial institutions and governments raise money. When turmoil in these markets pushes up borrowing costs, lenders must charge higher interest rates to borrowers taking out mortgages.
Rising mortgage costs affect not just individual households but the wider economy too. When more of people's income goes towards mortgage payments, they have less to spend on other purchases, which can slow economic growth and affect the property market overall.
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Originally published by The Guardian as “Average five-year fixed mortgage rate hits 6% for first time in three years”.