Mortgage rates: Average five year fixed deal hits new high in nightmare for Britons

Mortgage lenders have been bumping up rates and removing deals recently - driving up costs for homeowners.

The average two-year fixed residential mortgage deal stands at 6.47 per cent, edging up from 6.42 per cent yesterday, according to financial information website Moneyfacts.

Prime Minister Rishi Sunak has urged homeowners to "hold their nerve" over the increasing rates.

MP for Wolverhampton South East, Pat McFadden told GB News: "It's very concerning. It's like rolling financial thunder.

"The rate are going up and up, particularly over the past month or so. And every month there's about 200,000 more people coming off a two or a five year fixed rate, that might have been fixed in the past at something like two per cent.

"And they're now coming onto the kind of rate you've just quoted. It's going to cost families hundreds of pounds a month when they renew these deals and it's really going to squeeze their spending in other areas."

It comes as the Bank of England pushed the UK base interest rate to 5 per cent last month, which was a bigger hike than most economists were predicting.

The last time the typical five-year fixed-rate residential mortgage topped 6 per cent was when rates jumped sharply following former chancellor Kwasi Kwarteng’s mini-budget.

However, experts suggest that rates have still not reached their peak, with more expensive mortgages set to impact current and future homeowners.

There are around 2.4 million households whose fixed-rate deals are due to expire between this month and the end of 2024, according to figures from UK Finance.

While the average standard variable rate – which mortgage holders are usually moved to after their deal expires and before they fix to a new one – stood at 7.67 per cent on July 1.

Lib Dem MP and Treasury spokeswoman Sarah Olney urged the Government to do more in response to climbing mortgagerates.

She said: “This is yet more mortgage misery for homeowners on the brink.

“Rishi Sunak asking homeowners to hold their nerve is sounding more tin-eared by the day. It shows this Conservative Government is just totally out of touch.

“Conservative ministers sent mortgages spiralling through all their chaos and incompetence, now they are refusing to lift a finger to help.”

Last month, Chancellor Jeremy Hunt revealed a new mortgage charter which he worked on with major lenders representing around 85 per cent of the mortgage market.

Under the terms, banks will allow customers who are up to date with their payments to switch to interest-only payments for six months or extend their mortgage term to reduce their monthly payments.