The average mortgage rate for a five-year fixed deal has risen to 6.01%.

According to Moneyfacts, interest rates on a two-year fixed mortgage have also risen to 6.47%, after the Bank of England (BoE) took rates to a 15-year high of 5% at the end of June in a bid to tackle inflation.

The last time both two-year and five-year fixed rates went over the 6% threshold was in November 2022, following the mini-Budget announced by then-Chancellor, Kwasi Kwarteng, in September.

Lenders have also been withdrawing deals recently, further driving costs upwards for homeowners.

Despite the rise, Prime Minister Rishi Sunak has told people to “hold their nerve”, with the PM pledging to halve inflation by the end of the year, although it remained high at 8.7% in May.

Owner and mortgage advisor at Blue Fish Mortgage Solution, Ross McMillan, said: “In the current uncertain economic climate, the average mortgage rate across all levels has unquestionably risen in recent weeks but it’s important, beyond sensational headlines, that context is also applied.

“Alongside the initial deal length, loan-to-value (LTV) bands continue to have a bearing on lender risk assessment and associated rates and the higher rates focused on are most prominent at the peak of lenders’ risk areas, namely 95% LTV.

“For many people remortgaging, they will be looking at significantly lower loan to values with rates closer in many instances to 5% currently.

“The hope remains that inflation figures exceed expectations this week and the Bank of England refrains from further rate hikes and offers some respite from the volatile marketplace even if temporarily.”

Managing director at broker EHF Mortgages, Justin Moy, added: “There are still plenty of five-year deals below 6% currently available to both residential and buy-to-let borrowers.

“However, the trend is worrying, and quick action to secure a new deal is essential. 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 to be ready to make a quick decision.”

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