The average five-year fixed mortgage rate has reached 6% for the first time in three years, according to data from financial information service Moneyfacts. The milestone reflects broader pressure on lenders' costs as international economic uncertainty drives up borrowing expenses across markets.

The availability of cheaper deals has collapsed. About 1,494 mortgage products priced below 5% were available at the start of September. That number fell to nine by the time of reporting, a 99% drop in just weeks. Two-year fixed mortgages now average 5.98%, their highest level since December 2023.

Major lenders accelerated rate increases during September. Barclays raised selected fixed rates four times. HSBC, Lloyds Bank, Nationwide, NatWest, Santander and TSB each increased rates three times during the month.

Rachel Springall, finance expert at Moneyfacts, attributed the rises to climbing wholesale funding costs. "Borrowers who were hoping mortgage rates would stabilise will be disappointed," Springall said. She described the situation as "brutal" for those renewing deals.

The cost of government borrowing has accelerated the squeeze. Interest rates on government bonds, known as gilt yields, have risen, pushing up the long-term cost of funds that lenders rely on to finance mortgages. This dynamic has made rate rises "inevitable," Springall said.

Some borrowers have shifted toward variable-rate mortgages, which track the Bank of England's base rate. The number of sub-5% variable deals has remained broadly stable, while fixed-rate options below that threshold have nearly vanished.

The timing poses acute pressure for millions of households. The Bank of England forecasts that just over five million homeowners will face increased monthly payments by the end of 2028 as current fixed deals expire and they refinance at higher rates. Broader economic pressures compound the picture. Diesel prices topped £2 a litre for the first time on Friday, according to the RAC motoring group. Domestic energy prices rose 4% at the start of October, with regulators predicting a 16% increase when Ofgem sets its next price cap for January.

Those approaching the end of a fixed deal have some options. Springall noted that some lenders permit borrowers to lock in a rate three months before expiry, while others allow six months. She advised such borrowers to "seek advice and compare deals carefully."