Between November and December, the average five-year fixed mortgage rate saw its steepest month-on-month rise since August 2023, according to financial data provider Moneyfacts.  

In early November, the average five-year fixed rate across all deposit sizes stood at 5.09%. By early December, it had climbed 0.19 percentage points to 5.28%. Similarly, the average two-year fixed rate increased from 5.39% in November to 5.52% in December, a rise of 0.13 percentage points.  

Despite these upticks, fixed mortgage rates remain lower than at the start of the year. In January 2024, the average five-year fixed rate was 5.55%, while the two-year fixed rate averaged 5.93%.  

Rachel Springall, a Moneyfacts finance expert, attributed the recent rate increases to volatile swap rates, which lenders use to set their prices, despite two cuts to the Bank of England base rate this year.  

On a positive note, Springall highlighted improved product availability and a longer average shelf life for mortgages, which rose from 17 days in November to 21 days in December.

She added: "This indicates that lenders are not repricing or pulling deals as aggressively as they were during October. However, lenders will now need to grapple with any future uncertainty surrounding interest-rate pricing while aiming to hit any year-end targets. ".

"Borrowers will hope that mortgage rates will drop next year, and while there is speculation over multiple cuts to the Bank of England base rate, stubborn inflation can delay such decisions. In addition, the present market proves that a base-rate cut does not always mean fixed mortgage rates will immediately fall if there are other economic challenges in play for lenders to consider."

"First-time buyers may well be struggling to amass a large enough deposit to get their foot onto the property ladder, but in good news the number of deals at 95% loan-to-value (LTV) now stands at its highest point in over two years."

Moneyfacts counted 365 deals available at 95% LTV. Overall, it counted 6,486 mortgage products available at the start of December, up from 6,402 at the start of November.

Ms Springall added: "Those stuck paying rent may feel their homeownership dreams are scuppered because of the lack of affordable housing, which will take time to improve.

"As we move into 2025, it will be interesting to see how lenders will balance supporting their existing customers and enticing new business as the future of interest rates remains unpredictable."

The research was released as Barclays announced that, from Tuesday, it is reducing rates across its five-year fixed-rate homeowner purchase and remortgage range. The revamp includes a five-year fixed-rate house purchase deal with no product fee for borrowers with a 40% deposit, reduced from 4.34% to 4.20%.