Mortgage prices are at their highest level since 2023, with just nine sub-5 per cent fixed deals now available.

The average two-year mortgage rate has hit 5.98 per cent, according to Moneyfacts, while the average five-year deal has reached 6 per cent.

These are the highest average prices since December and September 2023, respectively.

The past month has seen major banks increase prices several times, as financial traders have begun to expect that inflation will stay higher for longer as a result of the US-Iran war.

Barclays increased fixed rates on four occasions, while HSBC, Lloyds Bank, Nationwide, NatWest, Santander and TSB each made three rounds of increases.

There were 1,494 sub-5 per cent fixed deals at the start of September, but 1,385 of these have since vanished, according to Moneyfacts.

Fixed mortgage rates, which most households have, give borrowers a set cost for a pre-determined period of time – usually two or five years – but once that period is over, they have to remortgage on to a new rate.

Mortgage rates tend to go up or down based on swap rates, which follow long-term predictions for where the Bank of England base rate could go in the future.

At the moment, the Bank is expected to increase rates next year, because inflation is set to climb higher than its current level of 3.1 per cent, and the Bank has a target of getting it down to 2 per cent.

Higher interest rates are often used to try and quell inflation.

Rachel Springall, finance expert at 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 per cent fixed mortgages has been brutal, with around 1,500 deals priced below 5 per cent vanishing since the start of September while average five-year fixed rate has reached 6 per cent, with the average two-year not far behind.”

Experts said further rises were probable in the near future.

Nick Mendes, mortgage technical manager at John Charcol brokers, said: “Lenders add an extra margin to their rates when they are unsure where their costs will be next week. Further increases are likely while markets stay this unsettled.”

On a £250,000 mortgage with a 30-year repayment term, the difference between a 5 per cent and 6 per cent rate is around £150 per month.

Borrowers coming off fixed rates in the coming months face a significant jump in payments.

To get the cheapest mortgage rate, compare a wide range of lenders and banks – don’t settle for the one you’re currently with. Consider speaking to a broker to help you as these are professionals who often have access to deals you can’t find online directly.

Most lenders will let you lock in a rate several months before yours ends.

“Doing so gives protection if rates rise further, and it does not stop them moving onto a better deal if rates improve before the new mortgage starts,” said Mendes.

The most important thing is to avoid letting your mortgage expire, as if you do this, you will end up going on to a standard variable rate.

In most cases if you’re buying a home you need the seller to accept your offer before you can submit a full mortgage application.

There is a major exception though.

“You can secure a rate if you are buying a home using Nationwide’s rate reservation tool which lets you book a rate for up to 90 days,” said Aaron Strutt of Trinity Financial.

Experts say it is still worth considering other lenders though.

“That should not be the reason you choose Nationwide over another lender. The mortgage still needs to suit your circumstances, and you need to meet the lender’s criteria,” added Mendes.