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| Mortgage rates: Average five-year fix rises above 6% | Mortgage rates: Average five-year fix rises above 6% |
| (32 minutes later) | |
| A typical five-year fixed mortgage deal now has an interest rate of more than 6%. | A typical five-year fixed mortgage deal now has an interest rate of more than 6%. |
| It comes after the Bank of England raised interest rates to a 15-year high of 5% last month, as it tries to bring down inflation. | It comes after the Bank of England raised interest rates to a 15-year high of 5% last month, as it tries to bring down inflation. |
| Mortgage lenders have been increasing rates and withdrawing deals recently, driving up costs for homeowners. | Mortgage lenders have been increasing rates and withdrawing deals recently, driving up costs for homeowners. |
| Prime Minister Rishi Sunak has urged homeowners to "hold their nerve" over rising rates. | Prime Minister Rishi Sunak has urged homeowners to "hold their nerve" over rising rates. |
| On Tuesday, the average rate for a five-year fixed mortgage stood at 6.01%, according to the financial information service Moneyfacts. The average two-year fixed deal is now 6.47%. | On Tuesday, the average rate for a five-year fixed mortgage stood at 6.01%, according to the financial information service Moneyfacts. The average two-year fixed deal is now 6.47%. |
| The last time those rates both topped 6% was in November last year, when interest rates rose sharply in the aftermath of then-Chancellor Kwasi Kwarteng's mini-budget. | The last time those rates both topped 6% was in November last year, when interest rates rose sharply in the aftermath of then-Chancellor Kwasi Kwarteng's mini-budget. |
| But after a period of calm they have climbed steadily again in recent weeks. | But after a period of calm they have climbed steadily again in recent weeks. |
| A year ago, those rates were closer to 3%. | A year ago, those rates were closer to 3%. |
| Sunak urges homeowners to 'hold nerve' over rising interest rates | Sunak urges homeowners to 'hold nerve' over rising interest rates |
| How worried should we be about rising mortgage rates? | How worried should we be about rising mortgage rates? |
| 'We had to sofa surf as rental ads said no to kids' | 'We had to sofa surf as rental ads said no to kids' |
| The Bank of England has raised interest rates 13 times since December 2021. | The Bank of England has raised interest rates 13 times since December 2021. |
| The idea is that by making it more expensive for people to borrow money, and more worthwhile for them to save, they will spend less and price increases will cool. | The idea is that by making it more expensive for people to borrow money, and more worthwhile for them to save, they will spend less and price increases will cool. |
| But inflation - which measures the rate at which prices are rising - remained stubbornly high at 8.7% in May. | But inflation - which measures the rate at which prices are rising - remained stubbornly high at 8.7% in May. |
| The prime minister has pledged to halve inflation by the end of the year, and has backed the Bank of England's rate rises. | The prime minister has pledged to halve inflation by the end of the year, and has backed the Bank of England's rate rises. |
| The Bank rate is a key influence on mortgage rates. Expectations that the Bank could continue to raise rates, and that they will stay higher for longer, have been reflected in the funding cost of mortgages, hitting new borrowers, and those trying to remortgage. | The Bank rate is a key influence on mortgage rates. Expectations that the Bank could continue to raise rates, and that they will stay higher for longer, have been reflected in the funding cost of mortgages, hitting new borrowers, and those trying to remortgage. |
| Lenders have been pulling deals and putting up rates at short notice, while some have been inundated with demand and so forced to pull or raise rates again. | Lenders have been pulling deals and putting up rates at short notice, while some have been inundated with demand and so forced to pull or raise rates again. |
| More than 400,000 people will see their existing fixed deals end between July and September, a comparatively high number. Many face the prospect of having to budget for monthly repayments that are hundreds of pounds more expensive than they have become accustomed to. | More than 400,000 people will see their existing fixed deals end between July and September, a comparatively high number. Many face the prospect of having to budget for monthly repayments that are hundreds of pounds more expensive than they have become accustomed to. |
| However, while mortgage rates have risen rapidly, the rates on savings accounts have not gone up as fast. | However, while mortgage rates have risen rapidly, the rates on savings accounts have not gone up as fast. |
| With the average rate for a two-year mortgage now 6.47%, the average easy access savings rate is 2.45%, according to Moneyfacts. That is a gap of 4.02 percentage points. | With the average rate for a two-year mortgage now 6.47%, the average easy access savings rate is 2.45%, according to Moneyfacts. That is a gap of 4.02 percentage points. |
| Bank bosses have been summoned by the Financial Conduct Authority to explain the low saving rates on offer. | Bank bosses have been summoned by the Financial Conduct Authority to explain the low saving rates on offer. |
| The recent rises in mortgage costs could also have a knock-on effect on renters who could face higher payments as landlords seek to recoup rising costs. Fewer rental properties could also be available as a result of squeezed landlords selling their property, according to the National Residential Landlords Association. | The recent rises in mortgage costs could also have a knock-on effect on renters who could face higher payments as landlords seek to recoup rising costs. Fewer rental properties could also be available as a result of squeezed landlords selling their property, according to the National Residential Landlords Association. |
| However, in a move to help mortgage-holders, banks and building societies will offer more flexibility on repayment terms. Borrowers will be able to make a temporary change to their mortgage terms, then will be able to return to their original deal within six months, allowing some to have lower repayments for a short time by just paying the interest on the home loan. | However, in a move to help mortgage-holders, banks and building societies will offer more flexibility on repayment terms. Borrowers will be able to make a temporary change to their mortgage terms, then will be able to return to their original deal within six months, allowing some to have lower repayments for a short time by just paying the interest on the home loan. |
| Rising interest rates and mortgage costs weighed on UK economic growth in April, but Chancellor Jeremy Hunt said the UK has "no alternative" but to increase interest rates in an attempt to tackle rising prices. | Rising interest rates and mortgage costs weighed on UK economic growth in April, but Chancellor Jeremy Hunt said the UK has "no alternative" but to increase interest rates in an attempt to tackle rising prices. |
| What happens if I miss a mortgage payment? | What happens if I miss a mortgage payment? |
| A shortfall equivalent to two or more months' repayments means you are officially in arrears | A shortfall equivalent to two or more months' repayments means you are officially in arrears |
| Your lender must then treat you fairly by considering any requests about changing how you pay, perhaps with lower repayments for a short period | Your lender must then treat you fairly by considering any requests about changing how you pay, perhaps with lower repayments for a short period |
| Any arrangement you come to will be reflected on your credit file - affecting your ability to borrow money in the future | Any arrangement you come to will be reflected on your credit file - affecting your ability to borrow money in the future |
| Read more here | Read more here |
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| Related Topics | Related Topics |
| Personal debt | Personal debt |
| UK economy | UK economy |
| Mortgages | Mortgages |