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New two-year fixed mortgage rates near 6% in mini-Budget fallout

Mortgage rates have risen by nearly a full percentage point in the ten days since the mini-budget, figures released today show

Two-year fixed mortgage rates near 6% mini-budget fallout as home loan costs rise and brokers warn of second week of chaos

  • Mortgage rates have risen nearly a full percentage point since the mini-budget
  • Brokers have warned homeowners of further chaos amid soaring interest rates
  • Lenders withdrew nearly 2,000 mortgage products in a race to reprice offers

Mortgage rates rose nearly a full percentage point in the ten days following the mini-budget, figures released today showed.

Brokers have warned homeowners face a second week of chaos as lenders try to cope with market expectations of soaring interest rates.

The typical cost of a two-year fixed mortgage has risen to 5.75% from 4.74% on September 23, the day of Chancellor Kwasi Kwarteng’s announcement.

This is more than double the average rate of 2.34% offered last December, according to analysts at Moneyfacts.

Mortgage rates have risen by nearly a full percentage point in the ten days since the mini-budget, figures released today show

Mortgage rates have risen by nearly a full percentage point in the ten days since the mini-budget, figures released today show

Meanwhile, the price of a five-year fixed-rate mortgage rose to 5.48% today from an average of 4.75% on the day of the mini-budget.

You can check out what fixed rate mortgage deals might be available to you and how much they would cost depending on the size of your mortgage, the value of your home and the term you want to secure. with This is Money’s best mortgage rate calculator, powered by L&C.

Panic swept through the housing market last week as the Bank of England feared to raise its base rate to 6% next year.

Lenders withdrew nearly 2,000 mortgage products last week as they rushed to reprice their offers to reflect future interest rate hikes.

Some, including Virgin Money and HSBC, cautiously returned to the market late last week – but with inflated rates.

NatWest announced on Sunday that it was increasing its fixed rate offerings by up to 1.78 percentage points.

According to data from the Bank of England, more than two million homeowners with fixed term loans will remortgage by the end of 2024. They will have to pay thousands more when budgets have already been strained.

Yesterday the Chancellor announced he was making a U-turn on his most controversial policy, by reducing the rate of income tax by 45p.

Brokers reportedly responded to inquiries from customers asking if they could withdraw mortgage applications submitted over the past week.

Experts said borrowers were mistakenly hoping the Chancellor’s U-turn could prompt lenders to cut rates in the coming weeks.

Dominik Lipnicki of Your Mortgage Solutions said: ‘The Chancellor’s decision yesterday was a political decision that will have little effect on the city. People are still very stressed and panicked as they begin to realize that they are facing a huge shock in their mortgage bills which is inevitable at this point.

Rising rates are likely to dampen property sales, said Dominic Agace, managing director of estate agency Winkworth. “That’s what happens every time there’s an increase in mortgage rates,” he told the Financial Times.

He added that the slowdown would be most pronounced in areas of the market where sales have peaked during the pandemic, such as large country homes.

On the first day of last month, 3,890 mortgage products were on sale. It crashed to around 2,000 and yesterday the figure was 2,262.

Rachel Springall, finance expert at Moneyfacts, said: “Borrowers may be worried about a further drop in mortgage availability, but many lenders have been very clear that their withdrawals are temporary amid uncertainty. interest rates.

“It would be wise to seek advice from an independent broker, especially for borrowers who have not yet started the mortgage process and who are deterred by the level of choice and mortgage rates much higher than they expect. had perhaps planned.

“The next few weeks will be crucial to see where lenders go from here, but we’ve already seen some new fixed offers coming in since last week.”

What to do if you need a mortgage

Borrowers who need to find a mortgage because their current fixed rate contract is coming to an end, or because they have agreed to buy a home, have been urged to act but not panic, written This is Money editor Simon Lambert.

Banks and building societies are still lending and mortgages are still being offered and applications are being accepted.

However, rates change rapidly and there is no guarantee that transactions will last and not be replaced by mortgages at higher rates.

This is Money’s best mortgage rate calculator, powered by L&C, that can show you deals that match your mortgage and property value.

What if I need to remortgage?

Borrowers should compare rates and speak to a mortgage broker and be prepared to act to get a rate.

Anyone with a fixed-rate deal ending in the next six to nine months should consider how much it would cost them to remortgage now — and consider entering into a new deal.

Most mortgage transactions allow fees to be added to the loan and they are then only charged at the time of subscription. By doing so, borrowers can secure a rate without paying costly arrangement fees.

What if I buy a house?

Those who have agreed to buy a home should also aim to get quotes as soon as possible, so they know exactly what their monthly payments will be.

Homebuyers should be wary of overstretching and prepare for the possibility of home prices falling from their current high levels, due to higher 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 rate calculator to view offers that match your home’s value, mortgage size, term, and fixed rate needs.

Be aware that rates can change quickly, however, and so the advice is that if you need a mortgage, compare rates and then speak to a broker as soon as possible, so they can help you find the loan mortgage that’s right for you.

> Check out the best fixed rate mortgages you could apply for

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