Mortgage rates rise but borrowers have more choice of home loans

Homebuyers have been hit by the highest jump in mortgage rates since March, research suggests.

Analysis by Moneyfacts found the typical pricing on two and five-year fixed rate deals gained pace this month but rates remain slightly lower compared to January 2024 at 5.91% and 5.48% respectively.

The number of deals has increased between April and May though from 6.307 to 6,565 – a 16-year high.

Rachel Springall, finance expert at Moneyfacts, said: “Mortgage rate rises have gained pace, with the average two- and five-year fixed rates increasing by 0.11% and 0.09% respectively, the biggest month-on-month jump since March 2024. 

“This counters the more subdued rises seen a month prior, so rates are closing in to levels not seen since the start of the year.”

Springall said volatile swap rates spurred lenders to review their fixed mortgage pricing, which has resulted in rises across all loan-to-value tiers on two- and five-year fixed mortgages. 

She added: “Borrowers may be concerned by these movements, but one positive point to take from the latest trends is that mortgage shelf-life has stabilised to 28 days.

“Despite lenders pulling selected fixed deals, some of which were priced below 5%, there was not a mass exit of products. It was evident that repricing during April was the clear focus among lenders, and in fact, mortgage product availability rose.

“It will still be cheaper for borrowers to grab a fixed mortgage now compared to sitting on a revert rate, based on average rates, and some borrowers may even consider a base rate tracker mortgage over the next two years if they are in line with economists’ predictions for the Bank of England to cut base rate this year. Consumers preparing to refinance or ready to buy their first home would be wise to seek advice to navigate the latest deals available.”