The average interest rate for new two-year fixed-rate mortgages is expected to surpass 6% in the near future as lenders grapple with disruptions in the sector.
According to financial information service Moneyfacts, the average rate reached 5.98% on Friday as more mortgage providers raised the cost of their home loans. This increase included two of the UK's largest lenders, Nationwide and NatWest.
NatWest's rate hike was its second in a week, following a similar move by HSBC.
Brokers have described a challenging situation where lenders raise rates on short notice, leading borrowers to quickly secure deals, resulting in lenders being overwhelmed and forced to adjust rates again.
"It is incredibly difficult for everyone to navigate, especially clients who need to make rapid decisions in these circumstances, while brokers work tirelessly to secure these rates," said Andrew Montlake of Coreco mortgage brokers.
The typical two-year fixed-rate mortgage had a rate of 5.92% on Thursday but saw an increase on Friday. However, it is still below the peak of 6.65% reached in October of the previous year, following the mini-budget during Liz Truss's premiership.
The average rate for a five-year fixed-rate mortgage is currently at 5.62%, compared to last year's peak of 6.51%, according to Moneyfacts.
Mortgage rates have been consistently rising, and there is a possibility of further increases in the future. The upcoming official inflation data to be published next Wednesday will play a significant role in determining the direction of rates.
Previous reports on wages and increasing prices suggest that inflation and interest rates in the UK may remain elevated for a longer period than previously anticipated, which is reflected in the funding costs of mortgages.