The cost of a two-year fixed-rate mortgage in the UK rose above 6 per cent on Monday while two-year gilt yields broke through the 5 per cent mark for the first time in 15 years, piling pressure on homeowners and Rishi Sunak’s government.
Mortgage costs have been rising sharply over the past week, ahead of an expected increase in interest rates from the Bank of England on Thursday. According to data provider Moneyfacts, the average cost of a two-year fixed-rate deal rose from 5.98 per cent on Friday to 6.01 per cent on Monday morning.
The cost of a five-year deal has risen from 5.62 per cent to 5.67 per cent. In an indication that mortgages rates could have even further to rise, two-year gilt yields rose 0.07 percentage points on Monday, as they went above 5 per cent for the first time since 2008.
Such increases pose a mounting challenge to Sunak’s government, which is already confronting a cost of living crisis and is lagging behind in the polls. But on Monday the prime minister declined to offer any new support to people struggling with mortgage payments.
“I know the anxiety people will have about the mortgage rates, that is why the first priority I set out at the beginning of the year was to halve inflation because that is the best and most important way that we can keep costs and interest rates down for people,” he told ITV’s Good Morning Britain.
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Source: www.ft.com
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