The cost of borrowing has risen sharply in the decade since the UK voted to leave the European Union, with average remortgage rates now more than three times higher than they were on referendum day.

Research from L&C Mortgages shows that the average two-year fixed remortgage rate offered by the top 10 UK lenders has increased from 1.52% on 24 June 2016 to 4.61% today.

Over the same period, the average five-year fixed remortgage rate has risen from 2.20% to 4.66%.

The figures highlight the extent to which the mortgage market has changed over the past decade, with borrowers facing significantly higher repayment costs than those seen during the prolonged period of ultra-low interest rates that followed the global financial crisis.

According to L&C, a borrower with a £200,000 repayment mortgage over 25 years would now pay around £322 more each month on the average two-year remortgage rate than they would have done in June 2016. That equates to an increase of almost £3,870 a year.

Homebuyers have also seen borrowing costs rise substantially. The average two-year fixed purchase rate at 90% loan-to-value has increased from 2.48% in June 2016 to 4.93% today, while the average five-year fixed purchase rate has climbed from 3.29% to 4.84%.

The shift has coincided with a period marked by significant economic and political events, including the Covid-19 pandemic, rising inflation, market volatility, geopolitical conflicts and changes in monetary policy.

The Bank of England base rate stood at 0.50% when voters went to the polls in June 2016. It now stands at 3.75%, having fallen briefly to 0.25% in the months following the referendum.

David Hollingworth, associate director at L&C Mortgages, said: “The rate environment has shifted dramatically since the referendum and borrowers have had to adapt to a radical change in mortgage costs.

“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.

“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.

“What does echo 2016 is that political uncertainty persists. The vote to leave resulted in a change of Prime Minister and borrowers today are again wondering what another change at the top will mean for them, following Keir Starmer’s resignation.

“Markets don’t like uncertainty, so borrowers may face more volatility to come. What is clear is that reviewing the mortgage and taking as much control as possible will improve the chance of getting the best possible value for your mortgage.”

While mortgage pricing has eased from the peaks seen during the market disruption of 2022 and 2023, rates remain considerably above the levels that borrowers had become accustomed to in the years immediately following the Brexit referendum.