Mortgage Bills to Jump by £788 Annually as Major UK Banks Raise Rates

Mortgage costs for UK households are set to increase by an average of £788 a year as major lenders raise their rates. According to Money Facts Compare, prominent banks such as Barclays, HSBC, Lloyds Bank, NatWest, and Santander have all implemented rate hikes since the start of March.

The average mortgage rate has climbed from 4.83% at the beginning of March to 5.28% by March 17. For a typical £250,000 mortgage over 25 years on a repayment basis, this translates into an additional £788.04 per year in costs compared to the pre-conflict period.

Rachel Springall, Finance Expert at Money Facts Compare, noted that while borrowers may be disappointed by the disappearance of sub-4% mortgage deals, the rising swap rates make such low offers unsustainable. She explained, “Lenders carefully consider their margins, and with expectations of higher interest rates, pricing deals too low would be risky, even in the short term.”

Springall also emphasized the need for stability in the mortgage market, pointing out that borrowing costs remain lower than in recent years despite the increases. “Sub-4% deals have been available since February 2025, but many lenders are now taking a cautious approach by withdrawing these offers.”

The recent rise in mortgage rates is largely driven by global pressures rather than UK fiscal policy. Springall clarified, “Rate hikes are not a reflection of the 2022 ‘mini-Budget’ fiasco that caused market turbulence.”

The unrest in the Middle East has caused an unusual spike in swap rates, forcing lenders to temporarily pull mortgage deals from the market. This surge has dampened hopes for a cut in the Bank of England Base Rate, with officials now more likely to hold rates steady.

Springall cautioned that ongoing global uncertainty and potential inflation spikes might prompt a base rate increase before the end of the year. She advised borrowers concerned about rising costs to seek professional advice promptly.

Additionally, securing a fixed-rate mortgage is crucial to avoid steep revert rates, which could save homeowners nearly £300 monthly in repayments. Existing borrowers are also encouraged to renegotiate their deals up to six months before their current terms end.