UK mortgage rates rise to highest level for a month

Breaking news from the markets: UK mortgage rates rise to highest level for a monthImage source, Getty ImagesByKevin Peachey Cost of living correspondentPublished28 minutes agoUK average mortgage rates have risen back to the level of a month ago as renewed tensions in the Middle East feed through to homeowners. Lenders' funding costs have increased as markets judge that a prolonged conflict reduces the possibility of interest rate cuts by central banks. The five biggest High Street banks are among a host of lenders which have increased their interest rates on new fixed deals in recent days.

Recent projections by the Bank of England suggest just over five million homeowners should expect their monthly mortgage repayments to increase by the end of 2028. Mortgage rates had been falling as a ceasefire between the US and Iran initially appeared to hold. But fresh strikes and Houthi militia attacks on oil tankers in the Red Sea reignited fears over global energy supplies.

Economic Details

Oil prices hit $100 a barrel for the first time since May on Thursday after several days of increases, stoking fears of higher inflation and a lower likelihood of interest rate cuts. Average rate still below Iran war peakMore than eight in 10 mortgage customers have fixed-rate deals. The interest rate on this kind of mortgage does not change until the deal expires, usually after two or five years, and a new one is chosen to replace it.

The average rate on a new two-year fixed deal is 5. 58%, according to financial information service Moneyfacts. Although it has risen consistently in recent days, it remains below the Iran war peak in April of 5.

The average rate on a five-year fixed deal is 5. How much could my mortgage payments change? How much are you borrowing?

Analyst Views

If you have an existing mortgage enter the outstanding balance left to pay. If not, enter the total you are looking to borrow. £ How long will you take to pay it back?

If you have an existing mortgage enter the total number of years remaining. If not, enter the total number of years you are looking to borrow over. years What is your current...

For those with a mortgage enter the rate for your current fixed term. For those without a mortgage enter an interest rate from another source, such as a bank's mortgage rate calculator. interest rate monthly payment interest rate % Choose an interest rate to compare with… % At this rate, your payments could change by… monthly change to monthly total The information you provided on your monthly payments would not be sufficient to pay off your mortgage within the number of years given.

Financial markets are tracking the development closely as investors assess the likely impact.