The average two-year fixed mortgage rates for residential property buyers in the UK hit 6.01% on Monday, sending the key borrowing metric for the housing market to its highest level since December 2022.
According to real estate information provider Moneyfacts, the rate stood at 5.98% on Friday. The rate of a five-year home loan has risen from 5.62% to 5.67%.
The surge has sent the number of available residential mortgage deals plummeting. The data shows that there were 4,683 products available on Monday, down from 4,923 recorded on Friday.
Mortgage costs in Britain have been growing sharply in recent days, ahead of an expected interest rate hike by the Bank of England later this week. The regulator is likely to raise borrowing costs for a 13th consecutive time on Thursday, in an effort to tame raging inflation.
More than a quarter of UK homeowners on a fixed-rate mortgage are now projected to head for sharp increase in monthly payments, once their current deals expire.
In May, the Bank of England said 1.3 million fixed-rate mortgages were set to mature before the end of 2023, with a larger number up for renewal in 2024.
“The market is dysfunctional and arguably broken,” Martin Stewart, director of mortgage advisory London Money, told CNBC. “We have seen evidence where advisers are in queues alongside 2,000 others all trying to secure something that might not actually exist by the time they get to the front of the queue.”
The industry expert added that the last nine months have been “seismic” for the mortgage and housing sector, “on a par with the financial crisis,” although with different causes.
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