![]() "It is hard to see that we won't see a substantial slowdown in economic activity over the coming months and indeed throughout 2023," he added. "Everyone who rolls off fixed on to variable, or fixed on to a new fixed rate, is going to see their monthly payments go up so dramatically on top of what's going on already around food and energy costs," said Jim Leaviss, CIO of public fixed income at investment manager M&G. Those average rates were both around 4.75% on Sept 23 before Kwarteng's fiscal giveaway, and were between 2-3% in October last year, Moneyfacts data showed.īanks are raising mortgage rates to get ahead of expected Bank of England rate rises, with money markets pricing in benchmark rates hitting nearly 6% next year, based on Refinitiv data.īut the higher rates will hit borrowers hard. ![]() Some of the deals pulled were gradually reintroduced this week at rates between one to two percentage points higher.īoth the average two-year and five-year fixed-rate mortgage was above 6% as of Friday - for the first time since 20 respectively, data provider Moneyfacts said. One senior banker said they had seen three times as many remortgage applications than normal in the week after Kwarteng's mini-budget, and had to redeploy staff to cope with a spike in customer calls. The turmoil led banks to withdraw nearly 1,700 mortgage products in the space of a week - equivalent to around 40% of available products - sparking a rush among consumers desperate to secure the cheapest possible deals. Markets took fright at the prospect that this would mean vast government borrowing, sending UK government bond prices tumbling, and driving bets on higher interest rates. ![]() ![]() Britain's mortgage market was plunged into chaos last month when the country's new finance minister Kwasi Kwarteng unveiled a so-called "mini-budget" that promised billions of pounds of unfunded tax cuts. ![]()
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