Mortgage rates: Average five-year fix goes above 6% for first time this year

The average mortgage rate for a five-year fixed deal has risen to 6.01%, up from 5.97% on Monday, as the cost of living squeeze continues, according to financial data provider Moneyfacts.

It is the highest since 21 November, when mortgage rates had been driven up by the mini-budget chaos.

The average two-year fixed residential mortgage rate jumped to 6.47%, up from 6.42% on Monday.

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Mortgage brokers have admitted that although rising rates for a five-year fixed mortgage are worrying, there are still some good deals available.

Justin Moy, managing director at EHF Mortgages, said: “With more lenders offering an option up to six months before the expiry of their current deal, it is so important to engage with a mortgage broker to see what is available, and be ready to make a quick decision.

“We are seeing a number of loyalty deals for product transfers much cheaper than average rates.

“Use the experience of a mortgage broker to get the right product for you, and to keep watching for any improvements — they will look to switch you to a cheaper deal if one comes along.”

The majority of mortgage holders are on fixed rate deals, 2.4 million of which will expire from now to the end of 2024, according to UK Finance.

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The recent rises in mortgage costs could also have a knock-on effect on renters who could face higher payments as landlords seek to recoup rising costs.

Rates have been on the rise again amid expectations that interest rates will need to stay higher for longer as the Bank of England tries to subdue sticky inflation.

The Bank of England base interest rate was hiked to a shock 5% last month. Another hike, bringing the rate to 5.5%, is forecast to come on 3 August, when the Bank of England's Monetary Policy Committee meets.

Elliott Culley, director at mortgage broker Switch Mortgage Finance, warned more mortgage misery is on its way.

He said: “Unfortunately, under current forecasts, rates still haven’t reached their peak. 5-year fixed rates have and continue to be cheaper than 2 year fixes and some clients have decided to fix for longer due to the uncertain outlook.There are still 5-year fixed rates under 6% and customers should remember this is an average rate.

"The current predictions still show rates should reduce by the end of 2024, albeit not to the low levels seen in the past."

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