- UK net mortgage borrowing increased to £7.7 billion in June.
- Fixed rates have consequently been rising since the beginning of July.
- Only a month ago mortgage rates were falling with hope for the trend to continue through the summer.
- The resumption of hostility in the Middle East has put paid to that, once again highlighting how quickly market volatility can change the outlook for borrowers.
- Fixed-rate deals are continuing to increase in cost this week – Halifax, Coventry BS and TSB are amongst the latest to increase.
- The average 2-year remortgage fixed rate costs are up over 20 basis points from 4.53% to 4.75%, 5-year up even more from 4.58% to 4.83%.
- The increase equates to a rise in monthly payments of £25 per month for the average 2 year and almost £29 per month for the 5 year based on a £200k 25 year repayment mortgage.
UK net mortgage borrowing rose to £7.7 billion in June, reflecting a significant uptick in demand despite rising costs.1
Fixed-rate mortgage deals have been on the rise since early July, with the average 2-year remortgage fixed rate increasing from 4.53% to 4.75% and 5-year rates from 4.58% to 4.83%.26
This increase translates to an additional £25 per month for the average 2-year mortgage and nearly £29 per month for the 5-year option, based on a £200,000 mortgage over 25 years.7
The recent rise in fixed rates comes after a brief period of declining rates, which had raised hopes for continued affordability through the summer. However, market volatility has been exacerbated by geopolitical tensions, particularly the resurgence of conflict in the Middle East, which has shifted market expectations.4
As a result, borrowers are facing a challenging landscape, with financial markets increasingly focused on future uncertainties rather than past trends.
Experts suggest that the Bank of England may opt to hold the base interest rate, but the ongoing fluctuations in fixed-rate deals indicate a turbulent period ahead for mortgage borrowers.
“The average 2-year remortgage fixed rate has increased over 20 basis points, now at 4.75%, while the 5-year rate is up to 4.83%. This rise translates to an additional £25 per month for a £200k 25-year repayment mortgage, reflecting the impact of recent market changes.”
