Moneyfacts Average Mortgage Rate rises for first time since Feb 2025: "a reminder that fiscal storm clouds are gathering"

MORTGAGE experts have said lender nerves ahead of the Budget are one contributor to new Moneyfacts data showing that average mortgage rates on the overall two- and five-year fixed rates rose for the first time in over six months, both by 0.02%, to 4.98% and 5.02% respectively. The last month-on-month rate rise was recorded at the start of February 2025. One broker said “rounding the Budget could be like rounding Cape Point in gale force winds and lenders are nervous”.

The Moneyfacts Average Mortgage Rate rose for the first time since February 2025 to 5.02%. The rate is up from 5.00% month-on-month, lower than 5.30% in October 2024, and much lower than 6.21% in October 2023.

The Moneyfacts research also found that shorter-term fixed mortgages have seen sharper falls over the past 12 months. At the start of October 2024, the average five-year fixed rate was 5.07%; compared to the start of this month, the rate is 0.05% lower at 5.02%. However, the average two-year fixed rate has fallen by 0.42% over the same period, down from 5.40% to 4.98%.

The mixed moves from lenders led to a rise in the average life of a mortgage, up to 22 days, from 17 days a month prior. This is the first time the average shelf-life has moved above 20 days for six months (21 days – April 2025). The average two-year tracker variable mortgage rate rose to 4.67%.

The average ‘revert to’ rate or Standard Variable Rate (SVR) fell to 7.27%. In comparison, the highest recorded was 8.19% during November and December 2023. Product choice overall fell month-on-month, to 6,998 options.

On a positive note, the combination in availability of deals at both the 95% and 90% loan-to-value tiers rose to 1,362 options, which remains the highest count in 17 years (1,532 – March 2008).

Rachel Springall, Finance Expert at Moneyfacts, said: “Borrowers may well be disappointed to see fixed mortgage rates on the rise. Volatile swap rates and a cautionary approach among lenders have led to an abrupt halt in consecutive monthly average rate falls.

"The average two- and five-year fixed mortgage rates rose by 0.02%, to 4.98% and 5.02% respectively, the first month-on-month rise in eight months (February 2025).

"Overall, the Moneyfacts Average Mortgage Rate also rose for the first time since February 2025 to 5.02%. The shift in sentiment towards pre-pricing and product churn during September led to a rise in the average shelf-life of a mortgage, to 22 days, the first jump above 20 days for six months (21 days – April 2025).

“This increase is likely a result of a calming mortgage market, so it will be interesting to see if activity picks up should lenders need to hit any year-end targets.”

Stephen Perkins, Managing Director at Norwich-based Yellow Brick Mortgages, said lenders are concerned about the upcoming Budget: "Right now, lenders are adjusting the sails prior to the wind changing direction, as they suspect there are rough seas ahead. Rounding the Budget could be like rounding Cape Point in gale force winds and lenders are nervous.

"The increases in rates are not huge but they do show that the market is uncertain and that lenders are concerned about the impact of the forthcoming fiscal event."

It's a view shared by Emma Jones, Managing Director at Runcorn-based Whenthebanksaysno.co.uk: "The mortgage market is moving sideways right now. Budget uncertainty is casting a long shadow over activity levels while lenders are also wary of what might be announced by the Chancellor.

"There's some decent innovation in the market at present as lenders try to get the market moving, but no amount of innovation can make up for the lack of confidence.

“The positive sentiment of the early summer has been replaced by stasis and uncertainty as we await the news from Number 11.”

David Stirling, Independent Financial Adviser at Belfast-based Mint Wealth Ltd, said: "The upward move in fixed rates may be modest, but it does mark a shift in sentiment and is a reminder that fiscal storm clouds are gathering.

"With the housing market eagerly anticipating any changes to taxation in the upcoming Budget, we will continue to walk a tightrope, with rates going either way."

Ranald Mitchell, Director at Norwich-based Charwin Mortgages, said that even a tiny rate rise can send first-time buyers running for cover.

He added: "First-time buyers have only just started to believe again after months of stability, and this knocks confidence flat.

"Every small movement upwards feels like a setback when buyers are already stretched to their limits. Lenders are working hard to stretch affordability and offer higher loan amounts, but rising rates slam the door shut for many.

“If buyers don’t move, sellers will have to, and that likely means softening prices to get deals done. The market needs first-timers back in force, but that won’t happen until confidence returns.”

But Craig Fish, Director at London-based Lodestone Mortgages, believes the market is calmer than many believe: "Average rates can be misleading, as they include deals that very few borrowers would ever need to touch. Most people can still secure significantly lower rates.

"Recent lender tweaks are less about fears of rising costs and more about managing their own mortgage books. Swap rates have remained stable, and that’s brought a much-needed calm to the market.

"The fact that product shelf life is increasing shows stability has returned, meaning borrowers no longer need to panic-lock a deal overnight. It’s also encouraging to see more options for 90% and 95% LTV mortgages, giving first-time buyers a genuine boost.

“Overall, the mortgage market feels far more serene and, after the turbulence of the past two years, that’s exactly what everyone needs.”