UK mortgage rates hit 15-year high after topping ‘mini budget’ peak

A key British mortgage rate hit a 15-year high on Tuesday when it broke above levels reached after last year’s “mini-budget” crisis.

The average two-year fixed residential mortgage rate reached 6.66%, slightly higher than the 6.65% reached on October 20 and the highest since August 2008, when it stood at 6.94%. Activity in Britain’s property market rebounded in early 2023 from the turmoil caused by former Prime Minister Liz Truss’s unfunded tax cut plans. But homeowners and buyers have faced new mortgage problems in recent months.

Fixed mortgage deal rates have risen rapidly in recent weeks as tougher-than-expected consumer price inflation, which held at 8.7% in May, pushed bond yields higher and increased market bets on the BoE benchmark rate, which peaked at 6.5%, up from 5%. now. Interchange rates, a key measure lenders use to determine the cost of home loans, have also skyrocketed. Two-year swaps rose 0.89 percentage points over the course of June.

The increase has prompted major mortgage lenders to repeatedly change the price of home loan offers. However, most households have not yet faced the impact of higher borrowing costs, as they are still bound by prior agreements. The five-year rate, which peaked last October at 6.51%, rose to 6.17% on Tuesday.

(This story has not been edited by Devdiscourse staff and is automatically generated from a syndicated feed.)