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The average two-year fixed-rate mortgage has topped 6pc for the first time this year - taking the rate toward levels last seen following Liz Truss and Kwasi Kwarteng’s disastrous so-called mini-budget.
Across all deposit sizes, the average two-year fixed rate deal edged up to 6.01pc on Monday, Moneyfactscompare.co.uk said.
This rate was at 5.98pc on Friday last week and hit 6pc over the weekend.
Rishi Sunak said he understands the “anxiety people will have about mortgage rates”, but that halving inflation is a priority.
Speaking to ITV’s Good Morning Britain, the prime minister said: "That is the best and most important way that we can keep costs and interest rates down for people.
"We've got a clear plan to do that, it is delivering, we need to stick to the plan.”
Mr Sunak highlighted government support schemes including a guarantee scheme for first-time buyers and a package to help people with interest payments.
"But look, that is why my first priority is to halve inflation, one of my other priorities is to cut the waiting lists,” he added.
The last time that the average two-year fixed-rate mortgage was 6pc or higher was on December 4 2022, according to Moneyfacts figures.
It came as a Tory MP warned Britain is facing a “mortgage catastrophe” as spiralling interest rates push up monthly payments.
Lucy Allan said “more and more ordinary people” are unable to pay their mortgages, warning of “hideous consequences” to come.
And, ahead of a meeting of the Bank of England’s rate-setting committee on Thursday, the Telford MP said it is “only going to get worse”.
The bank has hiked interest rates 12 times since December 2021, from 0.1pc to 4.5pc today, driving up monthly mortgage payments for millions.
Higher than expected wage growth in the first three months of the year raised expectations they will be hiked again this week, and could peak as high as 6 per cent.
And, as well as hiking their own borrowing rates, banks have responded to the higher interest rates by pulling mortgage deals from the market.
Homeowners are also facing a “mortgage crunch” next year, with annual payments set to sky-rocket by nearly £3,000, according to think tank the Resolution Foundation.
It said that yearly costs for those remortgaging in 2024 will increase by £2,900 as lenders jack up prices in response to higher rates.
Jeremy Hunt has said there is “no alternative” to the painful interest rate hikes, aimed at bringing inflation under control.
Jeremy Hunt has said there is ‘no alternative’ to higher interest rates to bring inflation under control (Jordan Pettitt/PA)
The chancellor said the government would be “unstinting” in its support for the Bank of England in its “mission to squeeze inflation out of the system”.
But Ms Allan, who is standing down at the next election, took aim at ministers who claim higher interest rates is a “price worth paying” to control inflation.
She said: “‘Well, it’s a price worth paying to control inflation,’is the mantra that is trotted out from their briefing packs, provided by mortgage-free senior civil servants
“But is it? A price worth paying?
“Have they really thought about what this means for the housing market and the wider economy and those scrambling to sell their homes while they still can.”
In a blog post on her website, Ms Allan said there is “a mortgage catastrophe staring us in the face”, adding that it is “only going to get worse”.
She described how, six months ago, when asked about what support a constituent could expect with mortgage payments she was “shocked”. But this is now “the ordinary experience of many homeowners”, she said, “and the numbers affected are rising”.
Last week, HSBC said it was withdrawing swathes of mortgage deals from the market for the second time in less than a week amid the uncertainty. That came after Santander also temporarily pulled mortgage deals for new lenders.
Ms Allan, a former insolvency specialist at PwC, said: “While I still tell my constituents to speak to their lender and get debt advice from the Citizens Advice Bureau, if I were their financial adviser, my advice would be: sell now, while you still can, it’s only going to get worse.”
https://news.google.com/rss/articles/CBMiX2h0dHBzOi8vd3d3LmluZGVwZW5kZW50LmNvLnVrL25ld3MvdWsvcG9saXRpY3MvbW9ydGdhZ2UtaW50ZXJlc3QtcmF0ZXMtY2FsY3VsYXRvci1iMjM2MDAzMy5odG1s0gEA?oc=5
2023-06-19 09:35:49Z
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