Mortgage Rates on the Rise: What You Need to Know

Mortgage rates are on the rise, and borrowers are feeling the pressure.

The UK’s mortgage market is experiencing a significant shift, as major lenders like Halifax and TSB increase their rates. This move is part of a broader trend, with several major banks hiking their rates in recent days. The pressure is on for borrowers, as the cost of borrowing continues to rise.

The Rate Hikes

Halifax, the UK’s largest mortgage lender, has announced that it will increase mortgage rates on numerous deals by up to 0.2 percentage points. This move follows similar hikes by other major banks, including HSBC, NatWest, and Barclays. The rate increases are a response to rising Swap rates, which are based on long-term predictions for the Bank of England interest rate.

“The timing of rate adjustments by any specific lender can vary based on several factors, including whether they managed to secure a significant amount of funding before an increase in Swap rates.” - Nick Mendes, John Charcol brokers

The Impact on Borrowers

The average two-year fixed mortgage rate is now 5.83%, according to Moneyfacts, while the average five-year fixed rate is 5.41%. These rates are significantly higher than they were at the start of 2024, when the average two-year fixed rate was 5.59% and the average five-year fixed rate was 5.22%.

Mortgage rates have been rising steadily in recent months.

What’s Next?

Brokers expect more lenders to follow suit, with rate increases likely until a cut to the Bank of England base rate is seen. With inflation figures showing a slower-than-expected decline, the pressure is on for borrowers to act quickly.

“We’ve seen the majority of the high street lenders adjust and expect the remainder to follow suit by the end of the week.” - Nick Mendes, John Charcol brokers

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