Average two-year fixed-rate mortgages are approaching the 6% mark, according to data from Moneyfacts, as borrowing costs continue their upward trajectory following similar movements in five-year products earlier this month.
Residential mortgage rates
The average two-year fixed mortgage rate now stands at 5.97%, up from 5.68% a month ago. This marks the closest approach to the 6% threshold since 7th December 2023, when the average rate stood at 6.01%.
Five-year fixed rates, which crossed the 6% mark earlier in the month for the first time in nearly three years, have since eased to 5.99%, up from 5.73% a month earlier.
Borrowers currently have approximately 8,560 residential mortgage products available, according to Moneyfacts data, though individual circumstances determine actual eligibility.
Buy-to-let market
In the buy-to-let sector, average two-year fixed rates currently sit at 5.63%, whilst five-year products average 6.01%. Landlords have access to 5,192 buy-to-let mortgage products.
The rate movements come as buy-to-let yields reach their highest level since 2011, potentially offsetting some of the impact of higher borrowing costs for property investors.
Industry perspective
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “While mortgage rates are on an upwards trend, borrowers should not panic. The Moneyfacts average fixed rate figure includes almost every deal under the sun. There are still plenty of two-year deals well below 6% and borrowers shouldn’t be put off from asking or looking around for a better deal.”
Harris noted that whole-of-market mortgage brokers can help borrowers navigate volatile swap rates, which underpin fixed-rate mortgage pricing. He added that borrowers may be able to reserve rates several months in advance, providing protection against further increases whilst retaining the option to switch to lower rates if they become available.
Market implications
The rising cost of mortgage finance may impact market activity, particularly as property viewings have declined significantly in recent months. The upward pressure on rates reflects movements in underlying swap rates, which remain subject to volatility amid broader economic uncertainty.
For property investors and homebuyers, the current environment presents a more challenging financing landscape compared to the sub-5% rates available in recent periods, though product availability remains relatively high across both residential and buy-to-let sectors.
