Mortgage rates edge up after eight-month decline

Mortgage costs have crept higher for the first time in eight months, with two- and five-year fixed-rate deals increasing by 0.02%, to reach 4.98% and 5.02% respectively.

That’s according to the latest Moneyfacts UK Mortgage Trends Treasury Report which says this is the first rise since February.

The overall Moneyfacts’ average mortgage rate climbed to 5.02%, up from 5.00% a month earlier, though it’s still well below the 6.21% recorded in October 2023.

Issues with volatile swap rates

Rachel Springall, a finance expert at Moneyfacts, said: “Borrowers may well be disappointed to see fixed mortgage rates on the rise.

“Volatile swap rates and a cautionary approach among lenders have led to an abrupt halt in consecutive monthly average rate falls.

“There may be little margin of rate movement from lenders in the coming weeks, prolonging the subdued sentiment.”

She added: “Inflation is expected to peak at 4%, which would then be double the desired 2% target, so any imminent base rate cuts by the Bank of England seem unlikely.

“However, even with the three base rate cuts since the start of 2025, fixed mortgage rates can move up regardless, such as in reaction to volatile swap rates.”

Product lifespan extends

The data also shows that the lifespan of mortgage products also lengthened, with the average shelf-life now at 22 days compared with 17 days in September.

This is the first time in six months that product longevity has exceeded 20 days.

Tracker rates followed suit, rising to 4.67%, while the average Standard Variable Rate fell slightly to 7.27%.

Product availability dipped below the 7,000 mark, standing at 6,998, despite an increase in deals for borrowers with smaller deposits.

Options at 90% and 95% loan-to-value reached 1,362 – the highest combined total since 2008.

Not all doom and gloom

Ms Springall said: “It is not all doom and gloom for borrowers, as the mortgage market has shown how far it has improved over recent years.

“Borrowers who locked into a two-year fixed rate deal back in October 2023 would have been paying 6.47% in interest on average, compared to 4.98% now.

“That is a difference of £225 per month in repayments on a £250,000 mortgage over 25 years.”

She adds: “The repercussions of rising fixed rates and subdued sentiment stifle the Government’s push for lenders to do more to boost UK growth.

“However, even with a slight dip in product choice across the mortgage spectrum, the combined quantity of deals available to borrowers with a 5% or 10% deposit or equity stands at a 17-year high.”