Mortgage rates rise: How much more could your monthly payments cost?

Mortgage rates keep on climbing with the average five-year fixed-rate mortgage now hitting 6% for the first time in three years.

The news is a blow for homeowners, especially if your fixed rate is coming to an end in the coming months.

The average five-year fixed rate was 4.94% at the start of February, meaning rates have increased by a full percentage point in little over six months.

This would add £158 a month to the repayment on a £250,000 mortgage over 25 years.

Here we look at which lenders are raising rates and what you can do to protect your finances.

Why are mortgage rates rising?

Mortgage lenders' costs are rising in financial markets, this is largely due to expectations that inflation will rise and interest rates will move up as a result.

The Bank of England base rate is currently 3.75%, but markets are now expecting there will be an increase this year.

Swap rates are an important factor in how lenders price fixed-rate mortgages and they have sharply risen in recent weeks.

Rachel Springall, from data site Moneyfactscompare.co.uk, said: “The past few weeks have seen pricing margins among major lenders come under immediate pressure from renewed swap rate volatility...

"The impact on sub-5% fixed mortgages has been brutal, with around 1,500 deals priced below 5% vanishing since the start of September while average five-year fixed rate has reached 6%, with the average two year not far behind.

"Average fixed mortgage rates have not been above 6% for around three years."

NatWest and TSB are the latest lenders to reprice many deals upwards in recent days.

How much could your mortgage payments increase?

Your bills depend on exactly how much you owe, the rate your secure and the term of a mortgage.

Comparing today's 6% average five-year rate with the 4.94% average rate recorded at the start of February on a £250,000 mortgage over 25 years, would have seen payments jump to around £1,611 a month from £1,453 a month.

That's a difference of £158.

But the bigger the mortgage, the more the increase in bills.

Using the same rates and conditions on a £350,000 mortgage would mean an increase of £221.

How can you reduce mortgage bills?

If you're due to come of a fixed rate mortgage and are worried about an increase in bills, there are steps you can take now.

First, get a mortgage broker to search the market for the best deal for your circumstances.

Advisers can access deals from hundreds of lenders and find the rate and deal that is right for your circumstances.

Brokers will also help your navigate mortgage fees that can push up the cost of a deal and sometimes make a higher rate better.

You can secure a new rate around six months in advance, which helps give you some protection against further rate rises.

If you're on a lower rate now and can afford to overpay your mortgage and erase more of the underlying debt, you'll pay less interest when you next come to remortgage.

You can bring down monthly deals by spreading repayments over a longer term, for example, moving to a 25-year term to a 30-year one instead.

However, a longer term means more interest paid on the debt in the long term.

Could mortgage rates fall back down in 2026?

It's impossible to say exactly what will happen with mortgage rates.

However, in the short-term it looks more likely that rates will stay higher.

All eyes will be on the Bank of England when it reveals it next rate review on 5 November 2026.

Policymakers usually give some indication about the outlook for rates and inflation - even if they don't make an immediate change to the base rate.