That takes the cost of two-year mortgages slightly above the peak of 6.65% set last autumn, when the borrowing market was rocked by Kwasi Kwarteng’s package of unfunded tax cuts.
It’s the highest rate for two-year fixed-rate mortgages since 2008, adding to the financial pain facing households who need to remortgage soon. They face paying many hundreds of pounds more each month, if they had previously fixed at low interest rates.
Millions are facing soaring mortgage rates. How did we leave them so vulnerable? | Will HuttonRead more
Fixed rate mortgages are priced off the yield (or interest rate) on UK government bonds. They hit their highest levels since the 2008 financial crisis last week, as investors anticipated further increases in interest rates to fight inflation.
Five year gilt yields have also joined two-year yields in pushing above their post mini-budget peak and both are now at their highest since mid-2008. pic.twitter.com/nmsm5WkSHb
— David Milliken (@david_milliken) July 6, 2023
Moneyfacts also reports that the average 5-year fixed residential mortgage rate has risen today to 6.17%, from 6.13% on Monday. That is the highest rate since last October.
Hundreds of mortgages have been pulled from the market again, as lenders rush to reprice deals. There are currently 4,344 residential mortgage products available, down from 4,631 on the previous working day.
Moneyfacts also reports that buy-to-let mortgage rates have risen. Here’s the details:
The average 2-year buy-to-let residential mortgage rate today is 6.83%, up from 6.81% on Monday
The average 5-year buy-to-let residential mortgage rate today is 6.62%, up from 6.60% on Monday
Reminder: MPs on the Treasury Committee will quiz mortgage lenders about the situation this morning….
🗣 This morning, we'll be questioning mortgage providers on the current state of the mortgage market in the UK.
📺 Join us in the Grimond room @HouseofCommons, at 10.15am or watch the session live 👇https://t.co/bVbeFwwlem https://t.co/jQ4NnNaWeg
— Treasury Committee (@CommonsTreasury) July 11, 2023
average two-year fixed mortgage rates have just hit a 15-year high of 6.66%.
UK two-year fixed mortgage rates hit highest level since 2008Read more
Here’s what to expect, from the committee:
The cross-party Committee of MPs will examine the current state of the mortgage market, including levels of mortgage stress, arrears and forbearance, and the outlook for the market in light of higher interest rates.
The Committee will question mortgage providers on consumer behaviour following recent rate rises, the impact on house prices and the wider housing market, and mortgage affordability and availability.
Government support schemes and the recently agreed ‘mortgage charter’ are also likely to be discussed, as are buy-to-let mortgages and the rental market, and the take-up of long-term fixed rate deals.
Here’s the panel:
Andrew Asaam, Homes Director, Lloyds Banking Group
Bradley Fordham, Mortgage Director, Santander UK
Charlotte Harrison, Interim CEO (Home Financing), Skipton Building Society
Henry Jordan, Home Commercial Director, Nationwide
Nigel Terrington, Chief Executive, Paragon Banking Group
pic.twitter.com/yTyswplupH
— Nikolay Kolarov, CFA (@libertniko) July 11, 2023
Better.co.uk
Aumonier adds:
“The rise amplifies the challenges faced by hopeful buyers, making the dream of owning a home increasingly unattainable as borrowing costs skyrocket and monthly repayments become overwhelming.
“Amidst this turmoil, existing homeowners who wish to remortgage find themselves trapped in a daunting maze of escalating interest rates, fuelling concerns about the financial strain they face”.
@MelJStride has no issue with ex-PM Liz Truss coming out with a growth plan, he tells @NickFerrariLBC. pic.twitter.com/YbjKInx1Hl
— LBC (@LBC) July 11, 2023
However, raising pay in the public sector would not fuel a classic wage-price spiral, as state schools and hospitals would not fund it through higher prices.
A chart showing average UK mortgage rates
soaring mortgage rates should stay calm and speak to their lender or mortgage brokers if they have any issues, says Charlotte Nixon, mortgage and financial planning expert at Quilter:
The recent Mortgage Charter introduced by the government underlines that lenders should provide help in the first instance to strugging borrowers, she explains.
Nixon warns, though, that the UK is in a ‘difficult place’, as average two-year mortgage rates hit 15-year highs today.
She says:
“With the average two-year fixed mortgage rate hitting a devilish 6.66% according to Moneyfacts, many mortgage holders and potential house buyers must be wondering when the flames will die down and things start to look a bit more normal. Unfortunately, the UK is in a difficult place with its battle against inflation and as such interest rates are going to have to keep going up in the short-term. This is going to feed into the mortgage market and as such this is not the top of the peak – more pain is to come.
“The chaos in the mortgage market is hitting house prices and this is going to cause some uncertainty over the rest of the year as servicing costs become harder to manage and affordability is tested to its limits. For those who have a fixed rate deal ending in the next six months, the message is clear – act now or you could face exorbitant costs on the standard variable rate that you will default on to.
“For those looking to take out a mortgage now, there are options to consider to lessen the burden, though they do come with consequences. Taking out a mortgage with a longer term can help reduce your monthly payments, however, cost over the whole period will be greater. Not all lenders offer this length but if you use a mortgage adviser, they can help you search the market for the best deal. Although a longer term does mean that you will pay more in interest over the full term it does reduce your monthly outgoings. Once you come to the end of your deal you could opt to remortgage to a shorter term, so it doesn’t necessarily have to be forever.
Currently you go to zzz to then wake up to a new mortgage rate jolt. The avg 2y fixed mortgage is now 6.66% up from 6.63% yesterday. Avg 5y – 6.17% up from 6.13%. Meanwhile landlords are hit with an avg inc to 6.83% from 6.81% on a 2y & 6.62% from 6.60% on a 5y @Moneyfacts_couk pic.twitter.com/U67HGpPQY0
— Emma Fildes (@emmafildes) July 11, 2023
Moneyfactsreports, up from 6.63% on Monday.
That takes the cost of two-year mortgages slightly above the peak of 6.65% set last autumn, when the borrowing market was rocked by Kwasi Kwarteng’s package of unfunded tax cuts.
It’s the highest rate for two-year fixed-rate mortgages since 2008, adding to the financial pain facing households who need to remortgage soon. They face paying many hundreds of pounds more each month, if they had previously fixed at low interest rates.
Millions are facing soaring mortgage rates. How did we leave them so vulnerable? | Will HuttonRead more
Fixed rate mortgages are priced off the yield (or interest rate) on UK government bonds. They hit their highest levels since the 2008 financial crisis last week, as investors anticipated further increases in interest rates to fight inflation.
Five year gilt yields have also joined two-year yields in pushing above their post mini-budget peak and both are now at their highest since mid-2008. pic.twitter.com/nmsm5WkSHb
— David Milliken (@david_milliken) July 6, 2023
Moneyfacts also reports that the average 5-year fixed residential mortgage rate has risen today to 6.17%, from 6.13% on Monday. That is the highest rate since last October.
Hundreds of mortgages have been pulled from the market again, as lenders rush to reprice deals. There are currently 4,344 residential mortgage products available, down from 4,631 on the previous working day.
Moneyfacts also reports that buy-to-let mortgage rates have risen. Here’s the details:
The average 2-year buy-to-let residential mortgage rate today is 6.83%, up from 6.81% on Monday
The average 5-year buy-to-let residential mortgage rate today is 6.62%, up from 6.60% on Monday
Reminder: MPs on the Treasury Committee will quiz mortgage lenders about the situation this morning….
🗣 This morning, we'll be questioning mortgage providers on the current state of the mortgage market in the UK.
📺 Join us in the Grimond room @HouseofCommons, at 10.15am or watch the session live 👇https://t.co/bVbeFwwlem https://t.co/jQ4NnNaWeg
— Treasury Committee (@CommonsTreasury) July 11, 2023
Pay growth was also revised up for the previous month to 7.3% from 7.2%.
Speaking at the Mansion House annual dinner in the City, the Bank of England governor, Andrew Bailey, and the chancellor, Jeremy Hunt, warned wage restraint would be needed to bring down high inflation.
More here.
Record UK pay growth adds to pressure for interest rate riseRead more
The TUC is concerned that pay continues to lag behind inflation, despite the rise in basic wages in the last two months.
TUC General Secretary Paul Nowak says it would be “reckless” to push the UK into recession to cool inflation:
“The government must stop scapegoating workers for its failures. Wages are not driving inflation – they are not even keeping up with it.
“In the public sector and lower-paid private sector industries, pay is even further behind.
“The Bank of England’s own data shows that nominal pay gains are being driven by the very highest earners.
“Working families have suffered 15 years of falling living standards. Ministers shouldn’t be forcing households to become even poorer.
“We need a credible economic plan for boosting growth, jobs and pay.
“Setting the UK on course for another damaging recession would be reckless.”
The 13 increases in UK interest rates since December 2021 could now be hitting demand for workers, says Kitty Ussher, chief economist at the Institute of Directors.
Ussher explains:
“Wage costs remain very acute for employers across all sectors of the economy as businesses struggle to find the talent they need in a market that still has over two hundred thousand more vacancies than before the pandemic.
“However, there are also some hopeful signs, with the number of vacancies falling and more people coming out of inactivity back into the labour market.
“There is also a suggestion that recent interest rate rises are starting to feed through, with a reduction in payrolled employees and a slight increase in the historically low rate of unemployment.”