1,494 Mortgage Deals Were Under 5% in September: Now Nine

The average UK five-year fixed mortgage rate reached 6.00% on Monday 5 October, the first time it has hit that level in three years, according to Moneyfacts. The average two-year fix climbed to 5.98%, its highest since December 2023. More striking than the averages is the disappearance of cheap deals: mortgages priced below 5% have fallen from 1,494 at the start of September to just nine. Lenders have repriced as bond market turmoil raised expectations of a Bank of England base rate rise, with the base rate currently held at 3.75%. A £250,000 mortgage at 6% costs around £158 a month more than the same loan at February's average of 4.94%.

The number that matters more than 6%

Everyone is leading on the 6% figure. It is the better headline and the lesser story.

1,494 to nine.

At the start of September there were close to 1,500 fixed-rate mortgage deals on the UK market priced below 5%. By 30 September there were five two-year fixes and seven five-year fixes left under that line. Today the count stands at nine.

A sub-5% mortgage has, for practical purposes, stopped existing in Britain in the space of four weeks.

That is not a gradual repricing. It is the whole market stepping over a line together, and it tells you more about how fast lenders moved than any average can.

What the averages actually say

The five-year average last stood at 6% on 27 September 2023, when it was 6.03%.

The move from 5.98% to 6.00% took a weekend.

For context on how far this has travelled: the average five-year fix in October 2021 was around 2.55%.

The best rate is more than a point below the average

Here is the part of this story that is genuinely useful and that almost nobody is publishing.

The average five-year fix is 6.00%. The best five-year fix on the market is 4.89%, from Halifax at 60% loan-to-value with a £1,099 fee, for purchase.

That is a gap of more than a full percentage point, and it is worth considerably more than the £158 a month that everyone is quoting as the cost of this repricing.

Other rates available at the start of October, on figures published by comparison sites:

• Halifax, five-year fix, purchase, 60% LTV — 4.89%, £1,099 fee
• NatWest, five-year fix, remortgage, 60% LTV — 5.02%, £1,025 fee
• Nationwide, five-year fix, remortgage, 60% LTV — 5.06%, £1,499 fee
• Yorkshire Building Society, five-year fix, home mover, 75% LTV — 5.07%, £1,495 fee
• Coventry Building Society, five-year fix, home mover, 75% LTV — 5.28%, no fee

The average is a statistic. It is not a price anyone has to accept, and the difference between taking the first rate offered and shopping properly is currently larger than the increase that has made the news.

Watch the fees, though. Several of the lowest headline rates carry product fees of £1,000 to £1,500, and a fee-free deal at a slightly higher rate can work out cheaper on a smaller loan. Compare the total cost over the fixed term rather than the advertised percentage — most comparison tables publish both.

Your deposit matters more than ever

The spread by loan-to-value has widened, and it is substantial.

Close to a full percentage point separates a buyer with 40% down from one with 5% down. On a £250,000 loan that is worth well over £100 a month.

Every one of those tiers rose in the week to 3 October, and all are roughly a percentage point higher than a year earlier.

Why it happened

Not the Bank of England. The base rate is 3.75% and was held in September.

What has moved is the money markets. Turbulence in global bond markets has increased expectations that the Bank will raise the base rate rather than cut it, with attention on the November meeting. Moneyfacts attributes the repricing specifically to swap rate volatility.

Swap rates are what lenders pay to borrow money at a fixed cost for a set period, and they are the input that determines fixed mortgage pricing. When swaps rise, fixed mortgage rates follow within days which is why the market can reprice while the base rate sits unchanged, and why a weekend was enough to push the average over 6%.

Most analysts expect UK mortgage rates to remain elevated through late 2026, with markets anticipating a hold or a possible rise in November.

Where this leaves you

If your fixed deal ends in the next six months. This is the group with something to do. Most lenders allow you to secure a new rate three to six months before your current deal expires, and if rates fall before completion you can usually switch to the lower one. Locking in now and reviewing later costs nothing in most cases and protects you if rates keep climbing. Check your lender's specific terms, because the window and the switching rules vary.

If you are on a standard variable rate. SVRs are typically far above fixed rates, with APRCs in the current market running above 6.5% and in some cases above 7%. If you are sitting on one because fixes looked expensive, they still look cheaper than that.

If you are buying. Your borrowing capacity has moved with these rates, so a mortgage in principle issued earlier in the year may no longer reflect what a lender will offer. Get it refreshed before making an offer.

If you are two or three years into a five-year fix. You are, on current pricing, paying below market. Early repayment charges on a fix of that length are typically substantial, and there is no obvious case for moving.

If you have a large deposit or significant equity. The 60% LTV tier is where the sub-5% deals that remain are concentrated. If you are close to that threshold, finding the extra to cross it may be worth more than anything else you can do.

Whoever you are, get the rate checked by a broker. The gap between the average and the best available is currently over a percentage point, and a broker sees deals that do not appear on comparison sites. Many are fee-free to the borrower.

The question everyone is asking

Should you fix now or wait?

Honestly, nobody knows. Markets currently expect a hold or a rise in November, which argues for fixing. Rates could equally fall if bond market volatility settles, which argues for waiting. Analysts have been wrong in both directions repeatedly through this cycle.

What can be said without forecasting is this. The option to secure a rate early and switch down if the market improves exists with most lenders, and it is asymmetric in the borrower's favour. That is a decision about managing risk rather than predicting rates, and it is the one a broker can actually help with.