[ad_1]
Homeowners have been told to prepare for more mortgage rate “misery” as the average five-year fixed-rate deal jumped above 6% per cent for the first time since November as lenders anticipate more Bank of England rate rises.
Five-year fixed rate average is now 6.01%, according to Moneyfacts and the two-year fixed rate is currently 6.47% after topping 6% last month.
The last time five-year deals exceeded 6% was in November last year, when rates rose sharply following the chaos caused by Liz Truss and her chancellor Kwasi Kwarteng’s infamous mini-budget.
It comes amid growing expectations that the Bank of England will push the UK base interest rate even higher – beyond the current level of 5%, following last month’s increase, which was the 13th time in a row that the central bank has pushed up rates in an attempt to curb persistent inflation.
The mortgage rate rises are like “rolling financial thunder” that will cost hard-pressed families hundreds of pounds a month, according to Labour’s shadow chief secretary to the Treasury.
Pat McFadden told GB News: “It’s really going to squeeze their spending in other areas. And it’s not just mortgage holders. It’s also renters too, because they’re renting from people whose mortgages are also going up.”
McFadden pointed to the fact that every month there are about 200,000 more people coming off a two- or a five-year fixed rate.
He added: “It’s really going to squeeze their spending in other areas. And it’s not just mortgage holders. It’s also renters too, because they’re renting from people whose mortgages are also going up. So this is evidence of our really tough squeeze on both mortgage holders and renters throughout the country.”
The Liberal Democrats – again calling for a £3bn mortgage protection fund – urged the Sunak government to do more in response to increasing mortgage rates.
“This is yet more mortgage misery for homeowners on the brink,” said Treasury spokeswoman Sarah Olney.
“Rishi Sunak asking homeowners to hold their nerve is sounding more tin-eared by the day,” she added.
The government says it recognises that it was a “very difficult time” for both mortgage holders and renters.
Rishi Sunak’s official spokesman said: “The single biggest thing government can do is work together with the Bank of England in lockstep to reduce inflation, which is driving some of these high mortgage rates we are seeing.”
Mortgage brokers warned of further pain ahead this summer – with some predicting rates could soon top 7%.
Caroline Luxmore, CCO at Ashman Bank, said: “Five-year fixed mortgage rates exceeding 6% for the first time since November 2022 is not welcome news for lenders or landlords alike.
“The increasing rise in interest rates is likely to have a significant knock-on impact on renters who may over time face higher payments when landlords seek to renew tenancies at higher levels in a bid to soften the burden they themselves may be feeling.”
Paul Welch of LoargeMortgageLoans.com is worried that swap rates looks set to remain high, driving up mortgage rates even further.
“If core inflation doesn’t come down significantly this month, or God forbid rises, then interest rates and swap rates will continue to go up and up,” he said. “It gives me no pleasure to say that we could realistically see some fixed rates reach 7 per cent before the summer is out.”
Rightmove’s mortgage spokesperson Matt Smith commented: “Average mortgage rates have continued to increase this week as anticipated, as the market continues to re-adjust its expectations around where the Base Rate will end up. The pace of rate increases is slowing – however, the market is still in a position where any further bad news is likely to see rates increase further.”
Peter Dockar of Gen H added: “Things may still get worse before they get better”.
[ad_2]
Source link
