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Monday, Jan 12, 2026

Mortgage rates hit fresh 14-year highs

Mortgage rates hit fresh 14-year highs

Mortgage rates continued to climb on Thursday, hitting their highest levels in 14 years, figures show.

Average two-and five-year fixed rates jumped to 6.65% and 6.51% respectively as UK borrowing costs remained elevated amid continued economic uncertainty.

One analyst warned mortgages were a "long way" from beginning to come down.

It comes as the Bank of England is expected to raise interest rates again in November in a bid to curb inflation.

Consumer prices rose by 10.1% in the year to September, returning to a 40-year high as food, energy and transport costs climbed.

However, on Thursday the Bank's deputy governor questioned whether "dramatic" rises in interest rates would be necessary amid signs that inflation may be starting to stabilise globally.

"Whether official interest rates have to rise by quite as much as currently priced in financial markets remains to be seen," Ben Broadbent told students at Imperial College London.

Mortgage rates have been rising for months as central banks across the world try to tackle inflation.

However, UK rates rose particularly sharply after financial markets reacted badly to government's mini-budget last month, which promised billions of pounds of unfunded tax cuts.

Lenders also suspended hundreds of mortgage products amid uncertainty over how to price these long term loans.

Researcher Moneyfacts said the number of deals available in the UK had recovered slightly to 3,128 - down from 3,961 on the morning of then Chancellor Kwasi Kwarteng's statement.

The number had dropped to 2,258 at the start of October, it said.

'Stability'


At least 100,000 mortgage holders per month are coming to the end of fixed-rate deals, and face steep rises in monthly repayments.

Brokers have said there is still demand for mortgages but lenders are wary of being swamped with applications while uncertainty in the economy remains.

Bill Blain, from investment firm Shard Capital, said mortgage rates coming down depended on "when we can create stability again".

"There's a lot of work to get UK interest rates to come back down especially when we still face an enormous inflation threat," he added.

"The only way you can address inflation is by continuing to raise interest rates, so I think we're a long way from seeing mortgage rates start to come down."

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