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Daily Mirror
Daily Mirror
Business
Zahra Khaliq

Mortgage rates hit highest level in 14 years - surging past 6% in blow for buyers

The average two-year fixed-rate mortgage has gone above 6% for the first time since 2008 - in another blow for property buyers.

A year ago, homeowners would pay 1% to 3% for the same deal, according to the latest figures from Moneyfacts.

The typical two-year fix stood at 6.07% on Wednesday - up from 5.97% on Tuesday.

This means someone borrowing £200,000 on a 30-year mortgage will be paying around £170 a month extra.

Two-year fixed-rate mortgages have historically been the most popular home loan in the UK.

Average five-year fixed-rate mortgages are hovering at 5.97%.

Rachel Springall, a finance expert at Moneyfacts, said: "Borrowers may well be concerned about the rise to fixed mortgage rates but it's essential they seek advice to assess the deals that are available to them right now.

The average two-year fixed rate mortgage is currently close to 6% (Getty Images/iStockphoto)

"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."

Mortgage rates have been going up for months thanks to rising interest rates - which currently sit at 2.25% - but the Mini-Budget sparked panic across the market.

Major lenders, including the likes of Halifax, NatWest and Nationwide, are increasing the cost of home loans after the value of the pound reached its lowest in 37 years, fuelling forecasts of higher interest rates.

Borrowers are now finding it increasingly hard to secure a deal as the market meltdown caused lenders to withdraw more than 1,000 products.

Moneyfacts said that on the morning of the Mini-Budget there were 3,961 deals available.

That number has dropped down to 2,371, with deals returning at a higher rate.

Lenders are expected to be less lenient when it comes to mortgage deals, and favour low-risk borrowers over homeowners who have higher debt levels or lower credit scores.

The UK's biggest mortgage lender, Halifax, has said it would be launching its new, higher rates on Wednesday.

A spokesperson for bank said: "The new rates reflect the continued increase in mortgage market pricing over recent weeks."

Other major lenders such as NatWest, Nationwide and Virgin Money have also seen increased rates.

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