The average rate for a two-year fixed rate mortgage has passed the “devilish” 6.66% point, figures show.
Moneyfacts yesterday revealed the average rate for a two-year fixed rate mortgage is now at a 15-year high of 6.67%, putting further pressure on buyer budgets.
Commenting on the figures, Charlotte Nixon, mortgage expert at wealth manager Quilter, said: “With the average two-year fixed mortgage rate hitting a devilish 6.66% according to Moneyfacts, many mortgage holders and potential house buyers must be wondering when the flames will die down and things start to look a bit more normal.
“Unfortunately, the UK is in a difficult place with its battle against inflation and as such interest rates are going to have to keep going up in the short-term. This is going to feed into the mortgage market and as such this is not the top of the peak – more pain is to come.
“The chaos in the mortgage market is hitting house prices and this is going to cause some uncertainty over the rest of the year as servicing costs become harder to manage and affordability is tested to its limits.”
Amanda Aumonier, head of mortgage operations at broker Better.co.uk, said: “The increase in the average rate of a two-year fixed mortgage deal casts a gloomy shadow over the possibility of homeownership for thousands of first-time buyers.
“The rise amplifies the challenges faced by hopeful buyers, making the dream of owning a home increasingly unattainable as borrowing costs skyrocket and monthly repayments become overwhelming.
“Amidst this turmoil, existing homeowners who wish to remortgage find themselves trapped in a daunting maze of escalating interest rates, fuelling concerns about the financial strain they face.”
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Let's try to remember that low interest rates were not the norm and the past 15 years have been an anomaly. Rates of 4-5% were normal. Fewer people own their own homes now and those that do are on long-term fixed rates, so the only route to peg back inflation is taxation. It's coming.
Agreed anyone who assumed low rates were for ever was not living in the real world.
Those rates will never return in my lifetime.
Keeping interest rates low for so long has just inflated house prices and delayed the inevitable crash.
And a recession. It's also coming. Happy Christmas :)
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