More than 1,000 UK mortgage products priced below 5% disappeared during September. At the same time, the average five-year fixed mortgage rate rose to approximately 5.95%, its highest level in three years. Residential repricing has moved beyond a handful of lenders changing selected products. It is now reducing the range of lower-priced options available to borrowers.
Mortgage decisions are not made against a single market average. They depend on which products remain available for the borrower’s loan-to-value, income, property, loan size and repayment structure. When more than 1,000 sub-5% deals disappear, the effect is not simply a less attractive headline rate. Some borrowers lose the product that best fitted their circumstances; others find that the next suitable option is materially more expensive.
Willow warned on 15 September that higher wholesale funding costs were reaching borrowers through mainstream lender repricing. The new October figures are not a reason to publish the same warning again. They show that the anticipated change has now produced a substantially narrower sub-5% market.
What Has Changed Since September?
More than 1,000 sub-5% mortgage deals have disappeared. Moneyfacts data reported on 1 October show how quickly the lower-priced part of the market contracted during the previous month.
The average five-year fixed mortgage rate reached approximately 5.95%. That was reported as its highest level in three years.
Competitive remortgage pricing also moved sharply. L&C data show that the average of the lowest two-year remortgage fixes from the ten largest lenders rose from around 4.68% at the start of September to 5.11% at month-end.
The Number of Available Deals Matters as Much as the Average Rate
An average mortgage rate is useful for showing direction, but it does not tell an individual borrower which product is available to them. A client refinancing at 60% loan-to-value may see a different part of the market from somebody borrowing at 85%. A straightforward salaried applicant may have more lender choices than a company director, an interest-only borrower or somebody seeking a seven-figure mortgage.
The withdrawal of lower-priced products can therefore affect borrowers unevenly. One applicant may still qualify for a competitive rate below the market average. Another may find that the product matching their loan size, property or income structure has been withdrawn, leaving a significantly more expensive alternative. The relevant question is not whether 5.95% applies to everybody. It is whether the suitable products for a particular case have changed.
This is why an agreement in principle obtained several weeks ago should not be treated as a rate reservation. It indicates that a lender may consider the application based on the information supplied at that point. Unless the required product-reservation or application stage has been completed, the pricing originally discussed may no longer be available.
A 43-Basis-Point Movement Is Material on a Large Mortgage
The L&C comparison provides a more practical illustration than a broad market average. The average of the lowest two-year remortgage fixes from ten large lenders reportedly moved from 4.68% at the beginning of September to 5.11% by the end—a difference of 0.43 percentage points.
On a constant £1m mortgage balance, 0.43 percentage points represents approximately £4,300 of interest over a year on a simplified interest-only basis. On £2m, the equivalent is approximately £8,600. On £5m, it is £21,500. These are illustrations rather than repayment-mortgage payment calculations, and they exclude fees, changes in balance and differences between products. They demonstrate why a movement that looks modest on a rate table can become commercially significant on seven-figure debt.
| Mortgage Balance | Simplified Annual Effect of 43bps | What Else Must Be Compared |
|---|---|---|
| £500,000 | Approximately £2,150 | Fees, incentives, term and repayment basis |
| £1m | Approximately £4,300 | Large-loan pricing, income treatment and interest-only terms |
| £2m | Approximately £8,600 | Mainstream, specialist and private-bank structures |
| £5m | Approximately £21,500 | Total facility economics, liquidity and repayment strategy |
Waiting for Rates to Fall Remains a Strategy—But It Now Has a Cost on the Other Side
Some borrowers will still choose to wait. They may expect inflation pressures to ease, wholesale markets to recover or lenders to compete more aggressively later. A borrower might also be expecting a property sale, a lower mortgage balance, improved income evidence or the expiry of an early repayment charge.
The problem is not the decision to wait. It is waiting without knowing what could be secured now. September demonstrates that the market can move against the borrower while they are considering the forecast. Establishing a current option creates a benchmark: the borrower can compare the known cost today with the uncertain possibility of a better—or worse—market later.
Where a mortgage can be arranged ahead of completion or an existing deal ending, the borrower should establish how long the offer remains valid and whether a cheaper product can be selected if the lender reduces pricing before completion. These rules vary. A rate switch may require a revised offer, further checks or a new application, and it should never be assumed.
The Correct Message Is Not “Fix Now”
No responsible adviser can say from these figures that mortgage rates will definitely continue rising. The useful action is to establish the viable options now, understand their expiry and conditions, and retain the ability to reassess where the lender permits it.
Remortgagers Within Nine Months Should Refresh Their Position
Borrowers whose existing deal expires in the next six to nine months should know the outstanding balance, early repayment charge, expiry date and likely borrowing requirement. They should also establish whether additional capital, interest-only borrowing or a different mortgage term will be required. Those details can change which lender is appropriate long before rate becomes the deciding factor.
An existing lender’s product transfer may be the right answer for a straightforward borrower, particularly where it reduces administration or avoids valuation and legal work. It should still be compared on total cost and suitability. A remortgage to another lender may offer different affordability treatment, additional borrowing, a longer term or an interest-only structure that the existing lender will not provide.
For larger loans, the comparison may extend across mainstream large-loan lenders, specialist banks and private banks. The lowest advertised rate is not automatically the cheapest executable mortgage once arrangement fees, asset-placement requirements, valuation costs and repayment flexibility are considered.
Buyers With an AIP Need to Check the Product, Not Just the Borrowing Figure
A buyer may still be able to borrow the amount shown in an earlier agreement in principle while facing a higher monthly cost or a different product range. Where affordability was already close to the lender’s limit, revised stress rates or product pricing may also affect the maximum loan available.
That becomes important before exchange. A buyer negotiating a property purchase needs an executable funding route, not a borrowing estimate produced under a previous product range. The position should be refreshed if the AIP or mortgage research is more than a few weeks old, particularly where the loan is large or the case depends on a limited number of suitable lenders.
Slower House-Price Growth Does Not Automatically Offset Higher Mortgage Costs
Nationwide reported that annual UK house-price growth slowed from 1.6% in August to 0.8% in September, with prices down 0.2% month on month after seasonal adjustment. That may improve negotiating conditions in some locations or property segments, but it does not create a uniform discount for every buyer.
Purchase price and finance therefore need to be considered together. A buyer who negotiates £20,000 off a property may improve the overall transaction more than they could through a very small mortgage-rate difference. Conversely, a higher mortgage cost can erode part of that saving. Willow does not advise clients what to offer for a property; we can show what the current finance does to the deposit, monthly cost and comfortable borrowing limit.
What Borrowers Should Establish Now
How Willow Private Finance Can Help
Willow can refresh a purchase or remortgage position against the products and lender criteria available now. For larger or more complex cases, that can include mainstream large-loan lenders, specialist banks and appropriate private-bank options rather than relying solely on the existing lender or the lowest advertised rate.
The review can compare fixed and tracker options, repayment and interest-only structures, capital raising, income treatment, fees, offer validity and the ability to change product before completion. The purpose is not to claim that today is the lowest point in the market. It is to give the borrower an executable option and a clear basis for deciding whether to proceed or keep waiting.
Mortgage Expiring or Purchase Underway? Refresh the Position.
More than 1,000 sub-5% deals disappeared during September. If your mortgage expires within nine months, or your purchase is proceeding on an older AIP, establish what is currently available and how long that option can remain open.
Explore Residential Mortgage Options →Frequently Asked Questions
Practical questions following the sharp reduction in sub-5% mortgage availability.
Does the 5.95% average mean that is the rate I will pay?
No. It is a broad market average, not a personalised quotation. The available rate depends on factors including loan-to-value, loan size, income, property, term, repayment basis and lender criteria.
Should I fix my mortgage now because more sub-5% deals have disappeared?
Not automatically. The appropriate product depends on your circumstances and attitude to rate risk. The useful first step is to establish what can be secured now, how long the offer lasts and whether it can be reviewed before completion.
Does an agreement in principle reserve a mortgage rate?
Usually not. An AIP is an initial assessment of borrowing eligibility. Product reservation commonly requires a later stage in the lender’s process, often a full application. Confirm the position for the particular lender.
How much is a 43-basis-point difference on a £1m mortgage?
On a simplified interest-only calculation using a constant £1m balance, it is approximately £4,300 over one year. Actual costs depend on fees, capital repayments, term and product structure.
Can I change to a cheaper rate after receiving a mortgage offer?
Sometimes. It depends on the lender, product and stage of the transaction. A change may require a revised offer, further checks or a new application, so the flexibility must be confirmed rather than assumed.