Sky-high rates return for the first time in over a decade
Average fixed rate mortgages have continued to climb in the past week, according to a report by the Evening Standard.
Citing data from financial information company Moneyfacts, the Standard report detailed how mortgage rates had pushed past 6% for the first time in over a decade.
Across all deposit sizes, the average two-year fixed-rate mortgage closed the week at 6.16%, up from 6.11% on Thursday and 6.07% on Wednesday. The average five-year fixed rate, meanwhile, was at 6.07% on Friday, up from 6.02% on Thursday and 5.97% on Wednesday.
These rate increases come after several products were pulled out of the market amid the fallout from Chancellor Kwasi Kwarteng’s mini budget. The Bank of England has also been hiking base rates in recent months as a result of soaring inflation.
Calculations by Moneyfacts last week revealed that someone with a mortgage of £200,000 could end up paying around £5,000 per year more than they would have last December if they were paying it back over a period of 25 years on a two-year fixed-rate deal.
“We may see mortgage rates fall to some extent if financial markets become more reassured by the Government’s economic plan, but the events of the last fortnight have been a reminder that the era of ultra-low rates is coming to an end,” Tom Bill, head of UK residential research at Knight Frank, said, per the Standard report.
According to the publication, the choice of mortgage products has, however, started to improve, with Moneyfacts counting 2,533 on Friday, compared to 2,430 on Thursday. Still, the total remains down from the 3,961 that were available on the day of the mini budget.