UK mortgage rates rise to highest level for a month

Image source, Getty ImagesByKevin PeacheyCost of living correspondentPublished10 minutes agoUK average mortgage rates have risen back to the level of a month ago as renewed tensions in the Middle East feed through to homeowners.Lenders' funding costs have increased as markets judge that a prolonged conflict reduces the possibility of interest rate cuts by central banks. The five biggest High Street banks are among a host of lenders which have increased their interest rates on new fixed deals in recent days.Recent projections by the Bank of England suggest just over five million homeowners should expect their monthly mortgage repayments to increase by the end of 2028.Mortgage rates had been falling as a ceasefire between the US and Iran initially appeared to hold.But fresh strikes and Houthi militia attacks on oil tankers in the Red Sea reignited fears over global energy supplies.Oil prices hit $100 a barrel for the first time since May on Thursday after several days of increases, stoking fears of higher inflation and a lower likelihood of interest rate cuts.Average rate still below Iran war peakMore than eight in 10 mortgage customers have fixed-rate deals.The interest rate on this kind of mortgage does not change until the deal expires, usually after two or five years, and a new one is chosen to replace it.The average rate on a new two-year fixed deal is 5.58%, according to financial information service Moneyfacts. Although it has risen consistently in recent days, it remains below the Iran war peak in April of 5.9%.The average rate on a five-year fixed deal is 5.6%. How much could my mortgage payments change? At this rate, your payments could change by… monthly change to monthly total The information you provided on your monthly payments would not be sufficient to pay off your mortgage within the number of years given. This calculator does not constitute financial advice. It is based on a standard mortgage repayment formula dependent on the mortgage size and length and a fixed interest rate. It should be used as a guide only and does not represent the suitability, eligibility or availability of mortgage offers for users. For exact figures, users will need to approach an official mortgage lender. Interest rates fluctuate based on the Bank of England's base rate and market conditions "It will be incredibly frustrating for borrowers to see rates rise back up to where they were a month ago. The positive progress over recent weeks now feels all but lost, but what the market needs is a period of stability," said Rachel Springall, finance expert at Moneyfacts.She said 100 deals had been pulled temporarily as lenders reconsider their pricing plans.She suggested that anyone who needed to remortgage this year could lock in a new deal now with their existing lender ahead of time, but should also seek help from a broker to see whether there are better deals elsewhere. "Brokers are an anchor during turbulent times as they can help borrowers keep abreast of changes and be there step by step when going through a mortgage application," she said.Borrowers had been heartened by the regular falls in mortgage rates during June and early July, but brokers say the latest changes are evidence of the uncertainty in the sector."Any borrower hoping for rate cuts to become an ongoing trend will need to rethink," said David Hollingworth, of L&C Mortgages."Momentum has performed an about turn and now clearly shifted to fixed rates rising in the near term at least."Get in touchIs your mortgage up for renewal in the next six months? Get in touch. Contact formRelated topicsPersonal financeMoneyCost of Living MortgagesHousing market