Homeowners searching for cheaper mortgages have seen more than 1,000 fixed-rate deals below 5 per cent disappear in just four weeks, leaving only a handful of low-cost options as average borrowing rates approach 6 per cent.
The rapid repricing has sharply reduced the number of mortgages available to borrowers seeking to lock in a fixed rate below the 5 per cent threshold.
At the beginning of September, around 630 two-year fixed-rate mortgages were available below 5 per cent, according to Moneyfacts. By Wednesday, that number had fallen to just five.
Five-year deals have suffered a similar retreat. The number available below 5 per cent fell from 638 at the start of the month to only seven.
At the same time, average mortgage rates have climbed towards 6 per cent. The average two-year fixed rate reached 5.93 per cent on Tuesday, its highest level since July 2024, while the average five-year rate rose to 5.94 per cent, its highest since October 2023.
The surge has been driven in part by rising swap rates, the market benchmarks used by lenders to price fixed-rate mortgages. These have climbed steadily since February, prompting banks and building societies to withdraw their cheapest products across much of the market.
Persistent inflationary pressures linked to the continuing conflict in the Middle East have added to the uncertainty, despite the Bank of England keeping its base rate at 3.75 per cent earlier this month.
Andrew Bailey, the Bank’s governor, heightened concerns last week by warning that interest rates could need to rise to prevent inflationary pressures from becoming entrenched.
Nick Mendes, a mortgage broker at John Charcol, said Bailey’s warning suggested policymakers could not afford to wait for definitive evidence of so-called second-round effects from the energy shock.
He urged borrowers still able to secure a mortgage below 5 per cent to act quickly, warning that “further repricing looks likely”.
“Markets are now pricing more than a full percentage point of increases over the next 15 months,” Mendes said.
“If that view firms up, swap rates could move higher again, and the remaining sub-5pc deals would be among the first to go.”
Several major banks are now anticipating a rate increase as early as November, Mendes added.
Chris Sykes, of property finance firm MSP Financial Solutions, advised borrowers approaching the end of a fixed-rate period to secure a new rate up to six months ahead of their remortgage.
“If rates improve between application and completion, you can move to a better rate, often with minimum hassle, all while having the security of a rate locked in in case they go up rather than down,” Sykes said.
The volatility has already prompted a series of lender repricings. Barclays increased its mortgage rates twice during September, while Nationwide raised its fixed-rate products by 0.3 percentage points. HSBC and TSB have also increased pricing.
For a borrower with a £250,000 mortgage over 25 years, the changes have added roughly £52 a month to repayments on a two-year fix and about £47 on a five-year fix, according to Moneyfacts.
Caitlyn Eastell of Moneyfacts said: “The scale of repricing in recent months has been a constant strain for borrowers and even the cheapest deals have climbed by over one per cent.”
With inflation forecast to reach 4.1 per cent in the first quarter of 2027, Eastell warned that the Bank of England could face increasing pressure to reverse course and raise interest rates further.
The disappearance of sub-5 per cent mortgages marks a sharp change for homeowners who had hoped that borrowing costs would continue to ease, and leaves borrowers facing a shrinking pool of cheaper deals just as expectations for future interest rates are becoming more volatile.
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