Editor's note: This brief was summarised by The Property AI Newsroom from a report by Property Industry Eye. Read the original article for full details.
Mortgage Rates Surge Again as Major Lenders Reprice for Second Time This Month
Major mortgage lenders have increased rates for the second time this month, putting further pressure on buyer affordability ahead of the Bank of England's next interest rate decision. NatWest, Santander, HSBC, Lloyds Bank and TSB are among those to have repriced products again since the start of September, while Nationwide and other building societies have also begun a second round of increases.
What the numbers show
According to Moneyfacts, the average two-year fixed mortgage rate stood at 5.73% on 15 September, up from 4.84% at the beginning of March, an increase of 0.89 percentage points in just over six months. For someone borrowing £250,000 over 25 years, that adds around £131 to monthly repayments, or an extra £1,572 a year.
Five-year fixes have also moved higher, with the average rate rising from 4.96% in March to 5.78%. The Moneyfacts Average New Mortgage Rate has reached 5.68%, up from 4.90% at the start of March and 5.59% in August. Moneyfacts said the average two-year fix is now at its highest level since June, while the five-year fix has returned to levels last seen in April.
Higher swap rates are feeding through to mortgage pricing. Moneyfacts expert Rachel Springall said a second wave of rate hikes had begun from the major banks in reaction to growing concerns surrounding inflationary pressures, with swap rates climbing above 4.70%. She noted it is highly likely other lenders will follow suit, and that returning deals could well be priced higher.
Moneyfacts also calculates that a further 0.25 percentage-point rise, from 5.73% to 5.98%, would add around £38 a month, or £456 a year, on a £250,000 repayment mortgage over 25 years.
Borrowers move early to secure deals
The volatility is encouraging borrowers to arrange their next mortgage early. FCA figures show 381,364 mortgages secured a new deal up to six months before maturity during the second quarter of 2026, following 499,271 in the first quarter. Meanwhile, around 750,000 households have fixed-rate mortgages expiring during 2026 and are currently paying rates below 3%, according to Bank of England estimates cited by Moneyfacts. Many could face higher repayments when they refinance.
Springall warned that borrowers coming off fixed deals secured in February 2022, when sub-2% fixed mortgages were available, will face a "huge shock", particularly those with five-year fixes not due to refinance until 2027. She added that lenders and brokers should ensure borrowers understand the implications of switching early, including any early repayment charges.
What it means for the rental market
For letting agents and inventory clerks, mortgage affordability remains a key factor in buyer budgets and transaction activity. Rising borrowing costs for prospective purchasers, and for landlords refinancing, could influence both sales activity and the supply of rental stock as the market absorbs these latest repricing rounds.
Source: Property Industry Eye