UK mortgage rates rise as swap rates increase

Average new mortgage rates in the UK increased by 0.12% in July, rising from 5.47% to 5.59% at the start of August. This shift reverses a 0.12% decline recorded the previous month.

Moneyfacts attributed the rise to increasing swap rates and geopolitical unrest in the Middle East, which has fueled concerns regarding energy prices and inflation. These factors have raised questions about the future path of interest rates and potential Bank of England base rate increases. Average 2-year and 5-year fixed mortgage rates also rose month-on-month for the first time since April.

Despite the rate increases, mortgage product availability improved for the fourth consecutive month, with the number of available deals rising to 7,357. Borrowers with smaller deposits faced increased pressure, as the average 5-year fixed rate at 95% loan-to-value rose above 6%.