The average interest rate on a five year fixed mortgage smashed through six per cent for the first time since 2010 in the latest blow for homeowners.
The symbolic breaching of the six per cent landmark came as the fallout from Kwasi Kwarteng’s botched mini-Budget continued to reverberate through the economy. Latest data from analysts Moneyfacts showed that the average rate on a five year fix – one of the most popular of all mortgage products – rose from 5.97 per cent to 6.02 per cent, the highest in 12 years.
On the day of the Chancellor’s speech, less than two weeks ago, it stood at just 4.75 per cent and a year ago they were at 2.55 per cent. Average two-year fixes broke through six per cent and then stood at 6.11 per cent, the highest since November 2008. The increase means millions of homeowners face crippling mortgage bill increases when their current deals come to an end. It is estimated that about 1.3 million households will have to remortgage next year because their fixes have expired. Moneyfacts finance expert Rachel Springer said: “Borrowers may well be concerned about the rise to fixed mortgage rates but it is essential they seek advice to assess the deals that are available to them right now.
“The drop in product availability may be worrying but many lenders have been vocal to stress their withdrawals are temporary amid interest rate uncertainties.
The Chancellor will meet with some of the country’s biggest banks to discuss concerns about the recent impact on the mortgage market. At the Tory Party conference, Kwarteng doubled-down on the Government’s plans to stimulate growth through a range of tax cuts.
