The last remaining fixed rate mortgages below 4% look set to disappear from the mortgage market this week as lenders respond to the rapid worsening outlook for borrowing costs.
Today NatWest withdrew its last deal below the psychologically important 4% mark, leaving an ever diminishing number of high street lenders prepared to offer deals at rates stating with a three.
Its two year fixed deal for remortgages where borrowers have a deposit of at least 40% goes up tomorrow from 3.97% to 4.32%. Most of its other deals are also going up by 35 basis points, just over a third of a percentage point.
Santander is still offering a of selection of sub-4% rates including two-year fixes from 3.78%, and three-year fixes from 3.83%
Nationwide also has a range of sub-4% rates starting from 3.79% with a £1,499 fee and 40% deposit.
Analysts Moneyfacts said the average two year fixed rate across the whole mortgage market has reached 5.2%, up 0.1% since Friday and the highest level since April 2025.
The average 5-year fixed mortgage rate today is 5.25% up from 5.19% since Friday and the highest since February last year.
In another worrying indicator for the market, almost 10% of mortgage products have been withdrawn in a week. There are currently 6,972 residential mortgage products available, down from 7,106 on Friday.
Britain’s mortgage market is currently in the throes of its biggest disruption since the Liz Truss mini-Budget of September 2022. Lenders have been forced to respond to a sudden rise in gilt yields since the start of the Iran war on February 20th.
Today the yield on the benchmark 10 year stood as just under 4.8%, up around half a percentage point since the start of the Iran war.
The dramatic increase in mortgage rates looks certain to have a major knock on effect on the London property market.
Before the outbreak of hostilities the Bank of England had been expected to drop its benchmark rate from 3.75% to 3.5% this week but that is now thought almost impossible in the light of upward pressure on inflation from higher energy costs.
