More misery for homeowners as average mortgage rate for two-year fixed deal rises above 6%
Homeowners face more agony as average two-year fixed mortgage rates soared above six per cent for the first time since December.
According to financial information service Moneyfacts the average rate for a two-year fixed-rate mortgage now stands at 6.01 per cent.
Following last October’s mini-Budget from the Government, interest rates on mortgages spiked to 6.65 per cent before falling off, although rates have started to climb steeply once more.
An average five-year fixed deal is now on the market for 5.67 per cent, down from last year’s high of 6.51 per cent.
The Bank of England has increased interest rates 12 consecutive times in recent months in a bid to counter rampant inflation, with mortgage lenders hiking deals.
The latest figure for the CPI measure of inflation was 8.7 per cent in the year to April, down from 10.1 per cent in March and 11.1 per cent in October.
As interest rates continue to rise, homeowners have seen hundreds of pounds added onto their mortgage repayments.
The Resolution Foundation has warned that around 800,000 households that need to remortgage next year face an almost £3,000 increase in their annual repayments.
But Prime Minister Rishi Sunak has today ruled out providing extra help given to struggling homeowners.
Speaking on ITV’s Good Morning Britain, the Prime Minister said: “I know the anxiety people will have about the mortgage rates, that is why the first priority I set out at the beginning of the year was to halve inflation because 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.
“But there is also support available for people. We have the mortgage guarantee scheme for first-time buyers and we have the support for mortgage interest scheme which is there to help people as well.”
Chancellor Jeremy Hunt is set to urge banks to help support those whose mortgage payments have been soaring in recent months.
It comes as average monthly house prices fell for the first time in 2023, according to recent data.
Figures from Rightmove show the price of homes fell by £82 in June to £372,812 the first monthly decrease this year, in a sign that a market correction is underway.
On Thursday, the BoE’s Monetary Policy Committee is poised to raise interest rates again from their current level of 4.5 per cent.
Inflation figures will be published by Office for National Statistics (ONS) on Wednesday as the cost of living crisis continues to bite.
The central bank has said it expects inflation to fall around five per cent by the end of this year before dropping to its two per cent target by late 2024.
