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Typical 5-year fixed rates now above 6%

Bank of England

The cost of your average 5-year fixed rate in the UK has now surpassed 6%, following the Bank of England’s latest move to raise interest rates.

Moneyfacts data shows that rates rose to 6.1% on Tuesday, the highest level since the markets were spooked by the ill-fated ‘mini-budget’ in November.

Caroline Luxmore, CCO at Ashman Bank, said: “Five-year fixed mortgage rates exceeding 6% for the first time since November 2022 is not welcome news for lenders or landlords alike.

“The increasing rise in interest rates is likely to have a significant knock-on impact on renters who may over time face higher payments when landlords seek to renew tenancies at higher levels in a bid to soften the burden they themselves may be feeling.”

She was still upbeat at the number of mortgage applications still in place.

Luxmore added: “While rates are going up rapidly, what we are experiencing is a reduction in mortgage products available on the market, the volatility in number of products available will reduce when the markets eventually start to stabilise.

“There is strong hope that we will see change on the run up to the end of the year.”

The Bank’s latest interest rate rise was on 22 June, when it raised them from 4.5% to 55%.

Claire Flynn, mortgage expert at Confused.com mortgages, said: “Mortgage borrowers are likely to continue to suffer from increasing interest rates throughout the remainder of 2023.

“Due to the rate of inflation continuing to rise, it was predicted that interest rates may rise to 4.7% by July 2023. However, following the recent interest rate rise from 4.5% to 5% before we even reach July, it’s now predicted that the Bank of England will increase interest rates to at least 6% by the end of the year.

“To survive rising interest rates and mortgage increases, speaking to your lender is the first step. The Financial Conduct Authority has increased its pressure on lenders this year to support customers struggling with rising mortgage costs, so many will have numerous options available.

“This may include taking a payment holiday, extending the term of your mortgage to reduce your monthly repayments, or potentially temporarily switching from a capital repayment to an interest-only or part-and-part repayment option.”

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