(Picture: PA Archive)
The average interest rate on a five year fixed mortgage smashed through six per cent for the first time since 2010 on Thursday in the latest blow for homeowners.
The symbolic breaching of the six per cent landmark came as the fallout from Kwasi Kwarteng’s botched mini-Budget continued to reverberate through the economy.
Latest data from analysts Moneyfacts showed that the average rate on a five year fix – one of the most popular of all mortgage products – rose from 5.97 per cent on Wednesday to 6.02 per cent on Thursday, the highest in 12 years.
On the day of the Chancellor’s speech, less than two weeks ago, it stood at just 4.75 per cent and a year ago they were at 2.55 per cent.
Average two-year fixes broke through six per cent on Wednsday and on Thursday stood at 6.11 per cent, the highest since November 2008.
The increase means millions of homeowners face crippling mortgage bill increases when their current deals come to an end. It is estimated that about 1.3 million households will have to remortgage next year because their fixes have expired.
Moneyfacts finance expert Rachel Springer said: “Borrowers may well be concerned about the rise to fixed mortgage rates but it is essential they seek advice to assess the deals that are available to them right now.
“The drop in product availability may be worrying but many lenders have been vocal to stress their withdrawals are temporary amid interest rate uncertainties.
“Fixing for longer may seem more appealing, particularly as both the average two and five year fixed rates rise to levels not seen in over a decade. Consumers must carefully consider whether now is the right time to buy a home or to wait and see how things change in the coming weeks.”
The Chancellor will meet with some of the country’s biggest banks on Thursday to discuss concerns about the recent impact on the mortgage market.
At the Tory Party conference, Mr Kwarteng doubled-down on the Government’s plans to stimulate growth through a range of tax cuts.
Despite enacting a U-turn on the cut to the 45p tax rate, Mr Kwarteng was defiant, saying: “We can’t sit idly by. What Britain needs more than ever is economic growth.”
While both the Chancellor and Liz Truss remained confident of their future plans for the economy, polling guru Sir John Curtice, said all of the “ingredients” for the Tories to be defeated at the next election are in place.
Speaking ahead of the Prime Minister’s Tory Party Conference speech, the professor of politics at Strathclyde University said the Government’s recent tax cutting budget shakeup could do “serious damage” to their reputation for economic competence.
He added the swing among voters was worse for the Tories than in 1992 after Black Wednesday, when a collapse in the pound forced Britain to withdraw from the European Exchange Rate Mechanism.
“All of the ingredients for electoral defeat are in place,” Sir John told Sky News.
