Rising swap rates are pushing mortgage pricing higher, with Moneyfacts figures showing the average two-year fixed residential mortgage rate has increased from 4.83% at the start of March to 5.35% today, its highest level since March 2025, adding around £900 per year to the cost of borrowing £250,000 over 25 years.
The average five-year fixed rate has also risen, from 4.95% to 5.39%, the highest since July 2024, adding around £775 annually. With two- and five-year swap rates now around 4–4.25% and at their highest level in over a year, analysis suggests mortgage rates could stabilise between 5.50% and 5.75% if base rate expectations materialise.
Adam French, Head of Consumer Finance at Moneyfacts, said:
“Swap rates, which underpin mortgage pricing, have risen sharply following the decision to hold the base rate at 3.75%, with markets interpreting commentary from the Bank of England as leaving the door open to rate rises amid ‘Trumpflation’ fears. With two- and five-year swaps now sitting at their highest level in more than a year, lenders are once again facing higher funding costs, and this will feed through into mortgage pricing.
Moneyfacts analysis of more than 30 years of historic rates data shows mortgage rates have historically averaged around 1.5 percentage points above Base Rate. If markets continue to price in one or two rate rises, this could see average new mortgage rates stabilise at around 5.50% to 5.75%. That would leave borrowers paying £1,000 to £1,500 more per year on a typical £250,000 mortgage compared to just a few weeks ago.
While a quicker resolution to the conflict in the Middle East could ease pressure on rates, the reality is that a more volatile world is a more expensive world. Even though the most competitive deals will remain below average, anyone looking to buy or remortgage this year needs to prepare for higher costs than previously expected.”
