Latest figures from Moneyfacts showed the average two-year fixed rate mortgage on a residential property increased from 5.98 per cent to 6.01 per cent, its highest level since December 1
U.K. borrowers are facing an issue that could damage the economy as increasing mortgage costs affect deal renewals and the number of products available reduces, experts cautioned Monday.
Latest figures from financial information firm Moneyfacts showed the average two-year fixed rate mortgage on a residential property increased from 5.98 per cent Friday to 6.01 per cent, its highest level since December 1.
The rise in late 2022 came amid the government’s market-stirring mini-budget. Before this, the financial firm stated, two-year fixed rates were last above 6 per cent in November 2008.
The number of residential mortgage products available has also dropped, from 5,264 on May 1 to 4,683.
Martin Stewart, director of mortgage advisory London Money, stated that the past nine months had been “seismic” for the mortgage and housing sector, “on a par with the financial crisis,” although with different reasons.
The market is dysfunctional and probably broken. We have seen proof where advisers are in queues alongside 2,000 others all attempting to obtain something that might not actually exist when they get to the front of the queue, Stewart told CNBC.
Pretty much everything is beginning with a 5 now. For context, two years back everything began with a 1 or lower, he said.
The average rate for a five-year mortgage is presently 5.67 per cent, as per Moneyfacts.
Asked about assistance for struggling households, PM Rishi Sunak on Monday told ITV’s Good Morning Britain program that the government’s priority was halving inflation and it needed to “stick to the plan.”
Banks including HSBC and Santander have, for now, withdrawn mortgage products in recent weeks in the wake of market uncertainty.
It comes as short-term U.K. government bond yields jump, with the 2-year yield reaching a new 15-year peak Monday.
Markets are pricing in peak interest rates of nearly 6 per cent, up from the present 4.5 per cent. A strong labour market report on June 13 sent rate expectations higher, with the BoE scheduled to announce its latest interest rate decision on Thursday after its 12th successive hike in May.