Homeowners were dealt another huge blow today when the average cost of a five-year fixed rate mortgage rose above the six per cent mark for the first time since November.
Latest data from analysts Moneyfacts show the average five-year fixed rate up from 5.97 per cent to 6.01 per cent.
Meanwhile the average two-year rate was on the brink of surging past the 6.5 per cent barrier after rising from 6.42 per cent to 6.47 per cent.
The ever-increasing cost of fixed rate products will hit thousands of homeowners a day as their existing deals expire and they are forced to remortgage with far more expensive finance.
Close to 90 per cent of all outstanding mortgages are on fixed rates, the vast majority taken out when borrowers could secure home loans at historic lows of around two per cent or even less.
Around 40 per cent of mortgages are fixed for two-year deals and a roughly similar proportion for five years.
Fixed mortgage rates have been steadily rising over recent months as yields on government bonds — or gilts — have spiked on fears that the Bank of England will have to increase borrowing costs even higher and keep them there longer than previously forecast to rein in “sticky” inflation.”
Government minister Johnny Mercer backed Rishi Sunak’s statement that Britain needed to “hold our nerve” over inflation, still above eight per cent.
“Things are going to get better,” he told Sky News.
But shadow Treasury minister Pat McFadden warned of the squeeze on many households, stressing: “It’s not just mortgage holders. It’s also renters too, because they’re renting from people whose mortgages are also going up.”
Meanwhile, Britain’s banks were in the dock over “profiteering” in the cost-of-living crisis.
The Financial Conduct Authority watchdog has summoned the four big banks for a showdown meeting on Thursday over accusations that they are dragging their feet in passing on interest rate rises to savers.
Mr Mercer said: “You don’t want to see any profiteering like this.”
UK Finance, which represents lenders, said: “Saving and mortgage rates aren’t directly linked.”
Supermarkets and broadband providers have also been accused of excessive profits.
