2-year fixed-rate mortgage rates near 6% in mini-budget fallout as housing loan costs soar and brokers warn of a chaotic second week
- Mortgage rates have risen nearly a full percentage point since the mini budget
- Realtors warn that homeowners face more chaos amid rising interest rates
- Lenders pulled nearly 2,000 mortgage products in a scramble to re-price deals
Today’s numbers showed that mortgage rates have risen nearly a full percentage point in the 10 days since the mini budget.
Realtors have warned that homeowners face a chaotic second week as lenders try to control market expectations of higher interest rates.
The typical cost of a two-year fixed-rate mortgage rose to 5.75 per cent, compared with 4.74 per cent on September 23, the day of Chancellor Kwasi Quarting’s announcement.
That’s more than double the 2.34 percent average rate quoted last December, according to analysts at Moneyfacts.
Today’s numbers showed that mortgage rates have risen nearly a full percentage point in the 10 days since the mini budget
Meanwhile, the rate of the five-year fixed-rate mortgage deal rose to 5.48 percent today from an average of 4.75 percent on the day of the mini-balance.
You can check which fixed rate mortgage deals can be offered to you and how much they will cost based on the size of your mortgage, the value of the house and how long you want to fix it. With Money’s best mortgage rate calculator, powered by L&C.
Panic gripped the property market last week amid fears that the Bank of England will raise the base interest rate to 6 per cent next year.
Lenders pulled nearly 2,000 mortgage products last week as they scrambled to reprice their deals to reflect higher interest rates in the future.
Some, including Virgin Money and HSBC, cautiously returned to the market last weekend – but at inflated prices.
NatWest announced Sunday that it increased its fixed-price deals by as much as 1.78 percentage points.
According to Bank of England data, more than two million homeowners will be refinanced with term loans between now and the end of 2024.
The chancellor announced yesterday that he was making a drastic change to his most controversial policy, cutting the income tax rate by 45p.
Brokers have reportedly sent inquiries from clients asking if they can withdraw mortgage applications submitted within the past week.
Experts said borrowers were wrongly hoping the advisor’s shift would prompt lenders to lower their rates over the next few weeks.
Dominic Lipnicki of Your Mortgage Solutions said: “The chancellor’s decision yesterday was a political one and will have little impact on the city. People are still very stressed and panicking as they are beginning to realize they are facing a huge shock to their mortgage bills which is inevitable.” At this stage.
Dominique Agasse, CEO of Winkworth Estate Agency, said the price hike is likely to halt property sales. “This is what happens every time there is an increase in mortgage rates,” he told the Financial Times.
He added that the slowdown will be most severe in areas of the market where sales peaked during the pandemic, such as large country homes.
On the first day of last month, 3,890 mortgage products were sold. That dropped to about 2,000, and yesterday the number was 2,262.
Rachel Springol, financial expert at Moneyfacts, said: “Borrowers may be anxious to see a further decline in mortgage availability, but many lenders have been very vocal that their withdrawals are taking place on a temporary basis amid uncertainty about interest rates.
Seeking advice from an independent broker would be wise, especially for those borrowers who have not yet begun the mortgage process and are being deterred by the level of selection and much higher mortgage rates than they expected.
“The next few weeks will be crucial to seeing where lenders go from here, but we’ve already seen some new firm deals arrive since last week.”
What to do if you need a mortgage
Borrowers who need to find a mortgage because their existing fixed-rate deal is coming to an end, or because they have agreed to buy a home, have been urged to act but not to panic, Writing this is Money Editor Simon Lambert.
Banks and building societies are still lending and mortgages are still being accepted with applications accepted.
However, rates change quickly, and there is no guarantee that deals will stick and won’t be replaced by mortgages that charge higher rates.
This is Money’s best mortgage rate calculator powered by L&C that can show you deals that match the value of your mortgage and property.
What if I need to re-travel?
Borrowers should compare rates, talk to a mortgage broker, and be prepared to work to secure a rate.
Anyone with a fixed-rate deal that expires within the next six to nine months should consider how much a remortgage will cost now — and consider a new deal.
Most mortgage deals allow a fee to be added to the loan and then only charged when you take it out. By doing this, borrowers can secure a rate without paying expensive arrangement fees.
What if I’m buying a house?
Those who have agreed to buy homes should also aim to lock in prices as early as possible, so they know exactly what their monthly payments will be.
Homebuyers should beware of overexerting themselves and be prepared for the possibility of home prices falling from their current high levels, due to high mortgage rates limiting people’s ability to borrow.
How to compare mortgage costs
The best way to compare mortgage costs and find the right deal for you is to talk to a good broker.
You can use our best mortgage rates calculator to show matching deals for your home value, mortgage size, term needs and flat rates.
Be aware that rates can change quickly, so the advice is that if you need a mortgage to compare rates then speak to a broker as soon as possible, so they can help you find the right mortgage for you.
> Check out the best fixed rate mortgages you can apply for