Swap rate volatility and surging gilt yields have driven the sharpest mortgage repricing since 2023, leaving borrowers with fewer options and higher costs
The average five-year fixed mortgage rate has reached 6% for the first time since September 2023, according to Moneyfacts.
The average two-year fixed rate has simultaneously climbed to 5.98% – its highest point since December 2023 – meaning average fixed mortgage rates have not been above 6% for around three years.
The trigger has been a surge in gilt yields through September. Thirty-year gilt yields broke 6% for the first time since 1998, while 10-year yields rose to their highest level since 2007 and five-year yields reached levels last seen in 2008.
It is those shorter-dated yields that feed most directly into mortgage pricing, with five-year swap rates rising from 4.35% to 4.7% over the past month and two-year swap rates moving from 4.25% to 4.59%. Fixed mortgage rates, which are priced off swap rates that move closely with gilt yields, followed suit.
Sub-5% deals effectively wiped out
The consequences for product availability have been severe. The number of fixed rate deals priced below 5% fell by 99% during September – from 1,494 at the start of the month to just nine today, excluding products available exclusively for lending in Northern Ireland. Including those products, the number fell from 1,691 to 107. Combined with a modest contraction in sub-5% variable deals, the market has lost approximately 1,610 mortgage options priced below 5% since 1 September.
Rachel Springall, finance expert at Moneyfacts, said the pace of repricing had been driven by structural pressures. "The past few weeks have seen pricing margins among major lenders come under immediate pressure from renewed swap rate volatility," she said. "As wholesale funding costs climb on the back of rising gilt yields, fixed rate adjustments are somewhat inevitable. The impact on sub-5% fixed mortgages has been brutal, with around 1,500 deals priced below 5% vanishing since the start of September."
The biggest high street lenders have moved repeatedly and in close succession. Barclays raised selected fixed rates on four separate occasions during the month. HSBC, Lloyds Bank, Nationwide, NatWest, Santander and TSB each made three rounds of increases.
Springall was direct about what this means for borrowers. "Borrowers who were hoping mortgage rates would stabilise will be disappointed," she said. "There have been some reductions along the way, but these have done little to offset the broader upward pressure on mortgage pricing."
Variable rates hold steady
Against the backdrop of fixed rate volatility, the sub-5% variable rate sector has remained broadly stable. Excluding Northern Ireland-only deals, the number of sub-5% variable products fell modestly – from 411 to 389 during September. That relative stability is drawing attention among brokers whose clients are weighing up options ahead of deal expiry dates, and it may point to growing interest in tracker products that shadow the Bank of England base rate.
Springall indicated as much. "It may be no surprise if borrowers are seriously considering a variable rate deal, such as a base rate tracker mortgage, particularly if it does not apply an early redemption penalty," she said. With recent analysis of UK mortgage market trends pointing to ongoing swap rate sensitivity, a tracker structured without early redemption charges could offer meaningful flexibility if conditions shift.
A familiar level, unwelcome timing
Average fixed rates above 6% were last seen in late 2023, when the market was still absorbing the aftermath of the September 2022 mini-budget. The return to those levels – driven this time by sustained swap rate pressure and gilt market turbulence rather than a comparable fiscal shock – may prove harder to communicate to borrowers who watched rates fall through 2024 and 2025.
UK borrowing costs are now the highest in the G7, with gilt yields rising more sharply than equivalent benchmarks in the US or Germany throughout 2026, a backdrop that analysts have warned could keep upward pressure on fixed mortgage pricing for some time.
Brokers and advisers tracking the latest news across the UK mortgage market will find the pace of lender moves has shown little sign of slowing. The window in which clients could have accessed sub-5% fixed deals has closed, and the timing of rate lock-in remains critical.
Springall's advice to those approaching the end of a fixed term is clear. "Those coming to the end of a fixed deal would be wise to seek advice and compare deals carefully," she said. "Borrowers could secure a new deal a few months before their existing mortgage ends. However, this varies among lenders – some may allow three months, others could allow six months for a product transfer – so not everyone will be able to lock into a new deal right now. Lenders look at their margins very carefully, so it would be unwise for them to price deals too low when swap rates and wholesale funding costs are elevated."
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
