Sub-5% mortgages are rapidly disappearing as another round of lender rate rises puts fresh pressure on buyers and the housing market.
Nationwide Building Society, Virgin Money and TSB are increasing mortgage rates, further reducing the number of deals available below the 5% mark.
The changes come after widespread repricing across the mortgage market in recent weeks. Higher inflation expectations and rising energy costs have pushed up borrowing costs.
It marks a sharp reversal from earlier this year. During January and February, borrowers could access a range of deals below 4%, with some two-year fixes falling as low as 3.5%.
Now, the lowest five-year fixed rate for a remortgage borrower stands at 5.02% with NatWest. Virgin Money’s lowest two-year remortgage fix is 5.01%.
Sub-5% deals running out
Only borrowers with large deposits can still access the handful of fixed rates below 5%.
Yorkshire Building Society currently offers a two-year fix at 4.93%, with a £1,495 fee. Skipton Building Society has a five-year fix at 4.91%, carrying a £1,995 fee.
Borrowers with a 20% deposit face rates starting at around 5.08%.
Nationwide’s latest repricing will leave it with just one sub-5% fixed deal for new customers.
Aaron Strutt of mortgage broker Trinity Financial said: “Unfortunately Nationwide will only have one fixed rate available to new customers below 5 per cent after these new rates go live, which is a two-year fix at 4.99 per cent with a £1,499 fee for those with a 40 per cent deposit.
“We are getting to the stage where there are not many sub-5 per cent fixed rate mortgages left but there are still some decent tracker deals to choose from.
“It would not be a surprise if more banks and building societies raise their rates over the coming days and at the moment price cuts look a long way off.”
Buyers face higher monthly bills
The rapid repricing has significant implications for affordability and buyer budgets.
On a £400,000 repayment mortgage over 25 years, a 3.5% rate would cost around £2,003 a month.
At 5.01%, the monthly payment rises to around £2,341.
That is an extra £338 a month, or more than £4,000 a year.
The latest increases come as higher mortgage costs are already weighing on housing demand. Bank of England figures published this week showed mortgage approvals for house purchases falling to their lowest level since December 2023.
