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Homeowners told to brace for further mortgage rate ‘disaster’ as the average five-year fixed-rate contract topped 6% for the first time since November as lenders anticipate further Bank of England interest rate hikes. It is
Five-year fixed rates are now averaging 6.01%, while two-year fixed rates are now at 6.47% after surpassing 6% last month, according to Moneyfacts.
The last time five-year contracts topped 6% was last November, when interest rates surged following the turmoil caused by Liz Truss and Prime Minister Kwasi Kwarten’s notorious mini-budgets.
This comes amid growing expectations that the Bank of England will raise the UK benchmark rate further beyond its current level of 5% following last month’s rate hike, the 13th consecutive time the central bank has are raising profits. An attempt to curb persistent inflation.
According to Labor’s shadow Treasury secretary, rising mortgage rates will be like a ‘rolling financial thunder’, costing needy households hundreds of pounds a month.
Pat McFadden told GB News: And it’s not just for mortgage holders. I’m also a renter because I’m borrowing from someone who also has a mortgage. “
McFadden pointed to the fact that about 200,000 people are dropping out of two- or five-year fixed rates each month.
He added, “It’s going to really squeeze spending in other areas. And it’s not just mortgage holders. We’re renting from people who are also up on mortgages, so they’re renters as well. So this is proof that we’re really cracking down on both mortgage holders and renters across the country.”
The Liberal Democrats have again called for the creation of a £3 billion mortgage protection fund and called on the Sunak government to take more action in response to rising mortgage rates.
“For homeowners on the brink, this is another mortgage dilemma,” Treasury Department spokeswoman Sarah Olney said.
“Rishi Sunak’s call to homeowners to be nervous is sounding harsher by the day,” she added.
The government said it recognized it was a “very difficult time” for both mortgage holders and renters.
Rishi Sunak’s official spokesperson said: “The most the government can do is to work in concert with the Bank of England to keep inflation under control. This is one of the high mortgage rates we are seeing. It’s causing a division,” he said.
Mortgage brokers warned of more pain coming this summer, with some predicting interest rates could rise above 7% soon.
“The fact that five-year fixed mortgage rates have crossed 6% for the first time since November 2022 is not welcome news for lenders or landlords,” Ashman Bank CCO Caroline Luxmore said. .
“Increasing interest rates could have significant ramifications for tenants who face higher payments in the long run if landlords seek to renew their leases at higher levels to lessen the burden on themselves. there is.”
Paul Welch of LoargeMortgageLoans.com worries that swap rates will remain high and mortgage rates will rise further.
“If core inflation doesn’t come down significantly this month, or God forbid it, interest rates and swap rates will continue to rise,” he said. “I’m not happy to say that some fixed rates could hit 7% before summer is over.”
“Average mortgage rates continue to rise as expected this week as the market continues to recalibrate its expectations of where the base rate will end up,” said Matt Smith, Mortgage Spokesperson for Rightmove. I am,” he commented. The pace of rate hikes has slowed, but the market is still in a position where more bad news could lead to more hikes. “
“Things could get worse before they get better,” added Peter Docker, of Gen H.