The average five-year, fixed-rate mortgage has topped 6 per cent for the first time since November as banks and building societies continue to push up rates.
Five-year fixes have risen from 4.97 per cent to 6.01 per cent between the start of May and today, according to the financial data analyst Moneyfacts, adding £1,488 a year to repayments on a typical 25-year mortgage worth £200,000.
It is the first time the average rate has reached 6 per cent since November 21, in the aftermath of the Liz Truss mini-budget that sent borrowing costs soaring. Before that, rates had not been so high since December 2008, in the heat of the financial crisis.
Rates have shot up over the past two months on the back of consumer price inflation that eclipsed expectations. The rate has remained stuck at 8.7 per cent in successive months, the Office for National Statistics said.
This has fuelled expectation that the the Bank of England will again increase the base rate, presently 5 per cent, and keep it higher for longer. The base rate has risen 13 times since an all-time low of 0.1 per cent in December 2021. These expectations of future Bank of England rates, called swap rates, are used by banks to price fixed-rate mortgages.
Five-year mortgage rates are below two-year rates, which now average 6.47 per cent, because of the expectation that rates will fall away in time. Two-year fixed rates peaked at 6.65 per cent on October 20.