Average two-year fixed rate climbs to 5.97% as swap rate volatility and an imminent Bank of England hike squeeze household budgets
Fixed mortgage rates have climbed to a three-year high, with the Moneyfacts Average New Mortgage Rate reaching 5.89% in November — up from 5.83% in October — as lenders reprice aggressively ahead of an anticipated Bank of England Base Rate (BBR) rise.
The last time the average was higher was November 2023, when it reached 6.07%, according to data from Moneyfacts. A BBR increase of 0.25%, which would mark the first hike in three years, is expected from the Monetary Policy Committee (MPC) imminently, compounding cost pressures already being felt by borrowers across the UK.
Lenders reprice ahead of the vote
The repricing activity has been widespread across the high street. The lowest two-year fixed rates from Barclays, HSBC, Lloyds Bank, NatWest and Santander are now, on average, 0.44% higher than they were at the start of September.
The two-year fixed rate average currently stands at 5.97% — its highest level since December 2023 (6.04%) — having risen by 1.14 percentage points since January, when the average was 4.83%. Five-year fixed rates have also moved significantly, reaching 6.00% in November from 5.01% in November 2025, while 10-year fixed rates now average 6.32%.
Swap rate volatility has driven much of the turbulence. As mortgage professionals across the UK will be aware, lenders price fixed deals against swap rates rather than the BBR directly — meaning market expectations of future rate movements feed through to product pricing ahead of any official decision. The result has been a challenging repricing environment that has hit borrowers before the MPC has even voted.
What borrowers are facing
The cost implications for households are stark. A borrower securing a £250,000 mortgage over a 25-year repayment term today, compared with the start of 2026, faces monthly repayments that are £169 higher — equivalent to £2,028 more per year — based on the 1.14 percentage point rise in the two-year fixed rate average since January, according to Moneyfacts calculations.
An anticipated 0.25% BBR rise adds further pressure — equivalent to around £444 more per year on a £250,000 mortgage — with economists expecting BBR to reach 0.50% higher by February 2027, compounding the challenge for borrowers with deals expiring early next year.
There is also the standard variable rate (SVR) risk for those who delay. The average SVR currently stands at 7.13%, a figure that makes inaction costly. A borrower who falls onto a revert rate rather than securing a new two-year fixed deal at 5.97% would pay approximately £182 more per month in repayments.
'The damage is unlikely to unwind entirely'
Rachel Springall, finance expert at Moneyfacts, said lenders had been caught between the need to reprice and the risk of overshooting.
“Mortgage rates have risen to a three-year high as a result of lenders grappling to re-adjust rates amid swap rate volatility,” she said. “Major lenders expect an imminent rise to the Bank of England Base Rate, their lowest rates are now priced 0.44% higher than they were at the start of September. Lenders could well pivot away from making aggressive rises over the coming weeks, but most of the damage is unlikely to unwind entirely.”
Springall acknowledged that the MPC’s forward guidance could provide some relief but cautioned against expecting a sharp reversal. “If the Monetary Policy Committee indicate a calmer path on future rate expectations, fixed mortgage rates could reduce slightly before the year is over, as some may have overcompensated for swap rate rises,” she added. “A BBR rise would be the first hike in three years, yet with conflicts in the Middle East and between Russia and Ukraine remaining on a knife-edge, prolonged pressure on global inflation could worsen the outlook for UK interest rates.”
On the broader impact for households, Springall was direct. “Delaying plans to get a mortgage this year has already come to haunt borrowers; with the rate on a typical two-year fixed mortgage rising by more than 1%, it would cost over £2,000 a year more in repayments when securing a deal now, than at the start of 2026.”
Tracker or fixed: the advice question brokers face
For brokers advising clients in the current environment, the choice between tracker and fixed products is both live and consequential. Two-year base rate tracker mortgages are currently priced almost 1% lower than their fixed rate counterparts. The two-year tracker average stands at 4.68% against the two-year fixed average of 5.97%, presenting a potentially significant saving for those who can tolerate rate exposure.
Springall noted that even if BBR rose by 0.50% by spring 2027, tracker customers could still be better positioned than those who locked in a fixed rate at current levels. However, she stressed that timing matters and that clients must be clear-eyed about their appetite for future increases — because a BBR rise gives lenders an immediate green light to pass it on, and tracker borrowers feel it first.
The clearest priority, Springall argued, is ensuring no client falls onto a revert rate. With the average SVR at 7.13%, brokers should be identifying clients due to roll off fixed deals and acting ahead of their expiry.
Securing a product transfer three to six months in advance of the deal end date remains the most effective defence. Those who delay, Springall warned, have already paid the price — and with further rate rises still possible, the window to act is narrowing.
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
