Two-Year Fixed Mortgage Rates Pass 6% for the First Time Since 2008 | Mortgage rates

The average rate for a new two-year fixed-rate mortgage rose above 6% for the first time since 2008, according to data that will heighten concerns about the mortgage market crisis.

News that the new typical rate had climbed to 6.07% came the day before Chancellor Kwasi Kwarteng was due to meet with leaders of Britain’s biggest banks to discuss the impact of the financial market turmoil on investors. mortgages and availability.

Moneyfacts, a financial data provider, said the new two-year average fixed rate rose again and crossed 6% on Wednesday. It rose to 5.97% on Tuesday, after already rising to 5.75% on Monday.

The two-year average rate fell from an average of 4.74% on September 23, the day of the mini-budget. At the beginning of December last year, the average was 2.34%.

Moneyfacts said the last time the rate was 6% or higher was in November 2008, when it hit 6.31%. It was weeks after the bankruptcy of Lehman Brothers and the start of the financial crisis.

Soaring mortgage rates mean some homeowners’ monthly payments are rising by hundreds of pounds. Someone who took out a £200,000 repayment mortgage over 25 years at a rate of 2.34% would pay off £882 a month. On a rate of 6.07% that would be £1,297-£415 more.

Mortgage repayment table

It had been hoped that the government’s 45 pence tax reversal on Monday and the slightly calmer market conditions that followed would result in further slightly cheaper mortgage deals.

So far, the opposite has happened, although some mortgage brokers said lenders needed time to react to the rapidly changing situation and predicted that some would start to cut back. their rates over the next week or fortnight, assuming the markets remain relatively stable.

Lenders effectively closed the shutters on new mortgages after the financial turmoil caused by the mini-budget sent interest rates on government borrowing soaring, pulling 40% off transactions last week. Most of the bigger players have re-entered the market, but their new offerings are usually much more expensive: for example, some of NatWest’s new two-year patches have gone from 4.28% to 5.62%.

Unusually, the new five-year average fixed mortgage rate is lower than the typical two-year cost, at 5.97% as of Wednesday – although it was up from 5.75% just 24 hours later. early.

Moneyfacts also said the number of new standard mortgage deals available rose marginally on Wednesday to 2,371 from 2,358 the day before.

A spokesperson said: ‘Fixing longer may seem more appealing…Consumers need to carefully consider whether the time is right to buy a home or wait to see how things change in the weeks ahead.’ They added: “It is essential that they seek advice to assess the offers available to them at this time.”

Some mortgage brokers try to calm worried borrowers. Private Finance said that while the mortgage market had “entered an unprecedented period” after the mini-budget, “we want to reassure everyone that recent activity…is not a mortgage crisis, and the banks are always willing to lend”.

Sky News reported that leaders of Britain’s biggest lenders have been summoned for Treasury-convened talks with Kwarteng on Thursday, with bosses from Barclays, Lloyds Banking Group and NatWest among those expected to attend.

After lenders withdrew from mortgage deals en masse in the days following the mini-budget and in many cases scaled them up, Nikhil Rathi, chief executive of the Financial Conduct Authority, told The Sunday Times that the regulator was “incredibly vigilant” about the impact on households of higher rates.

He added that banks should explain when products would be back on the market, saying: “If a product is withdrawn for a temporary period, we want to understand when it will be back on the market, so that people who may have need to refinance are able to continue with their plans.

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