The number of fixed-rate mortgages priced below 5% has collapsed by 99% since the start of September, leaving just nine sub-5% fixed-rate deals on the market, according to Moneyfacts.
That compares with 1,494 sub-5% fixed-rate deals available at the beginning of September. The figures exclude products available exclusively in Northern Ireland.
Rates return to three-year highs
Mortgage rates have also returned to levels last seen three years ago. The average five-year fixed rate has reached 6%, its highest since September 2023. Meanwhile, the average two-year fix has climbed to 5.98%, its highest since December 2023.
The rapid repricing could put further pressure on buyer affordability and transactions. It comes as major lenders repeatedly increased rates during September. Barclays raised selected fixed rates four times. HSBC, Lloyds Bank, Nationwide, NatWest, Santander and TSB each made three rounds of increases.
Variable rates more resilient
Variable-rate products have proved more resilient. The number priced below 5% slipped from 411 to 389 during September. Including Northern Ireland-only products, the mortgage market lost 1,610 sub-5% fixed and variable options over the period.
Moneyfacts said rising gilt yields and volatile swap rates had pushed up wholesale funding costs. That has left lenders with less scope to offer cheaper fixed-rate mortgages.
Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “The impact on sub-5% fixed mortgages has been brutal, with around 1,500 deals priced below 5% vanishing since the start of September while average five-year fixed rate has reached 6%, with the average two year not far behind.”
She added: “Average fixed mortgage rates rising back to three-year highs will be disastrous news for borrowers.”
Springall said borrowers approaching the end of a fixed deal should compare their options carefully. Some lenders allow customers to secure a new deal several months before their existing mortgage ends. She added: “Borrowers who were hoping mortgage rates would stabilise will be disappointed.”
Agents see buyer sensitivity
Ian Harris, president of NAEA Propertymark, said agents were already seeing the impact of higher mortgage costs on buyers. He commented: “We are seeing first-hand how sensitive buyers are to mortgage rates, and the rapid disappearance of sub-5% deals will inevitably add further pressure to affordability.
“For some buyers, even a relatively small increase in monthly repayments can mean they have to reduce their budget or step back from a purchase altogether. Equally, homeowners coming off fixed-rate deals may face significantly higher repayments, which could affect their decision to move.
“This makes realistic pricing and good financial preparation more important than ever. Buyers and sellers need confidence that the figures work before committing, while greater stability in mortgage pricing would help restore confidence and keep people moving through the housing market.”
