The average five-year remortgage rate has more than doubled over the same period, moving from 2.20% to 4.66%

A decade has passed since the UK voted to leave the European Union, and new research from L&C Mortgages illustrates how dramatically the mortgage market has shifted in that time.

Tracking the lowest rates from the top 10 UK lenders, L&C found that the average two-year remortgage rate for borrowers with a 40% deposit stood at 1.52% on referendum day in June 2016. That figure has since risen to 4.61% — a threefold increase. The average five-year remortgage rate has more than doubled over the same period, moving from 2.20% to 4.66%.

The monthly cost impact is substantial. On a £200,000 repayment mortgage over 25 years, borrowers are now paying approximately £322 more per month than in 2016, equivalent to nearly £3,870 more per year.

Purchase rates have followed a similar trajectory. The average two-year rate for homebuyers with a 10% deposit was 2.48% in June 2016 and now stands at 4.93%. The average five-year purchase rate has risen from 3.29% to 4.84% over the same period.

The rate environment has been shaped by a range of factors over the decade, including the COVID-19 pandemic, a sharp rise in inflation, the September 2022 mini budget, and geopolitical instability in Ukraine and the Middle East — all of which pushed up funding costs for lenders.

The rate environment has shifted dramatically since the referendum and borrowers have had to adapt to a radical change in mortgage costs, said David Hollingworth, associate director at L&C Mortgages. Base rate sits at 3.75% today compared to just 0.50% at the time of the vote to leave the EU and then dipping further to 0.25% in the following months.

A lot has happened in the mortgage market over the last ten years, but a generation of borrowers that was used to rock bottom interest rates have had to recalibrate. Ultra-low rates became the norm over a prolonged period, so the rapid uplift has made life difficult for homeowners, he said.

He said: First-time buyers and homemovers are now navigating a market where rates of close to 5% or more have become typical, which may not dull the desire to buy but does transform how people think about their mortgage choices.