Interest rates on mortgages climb past the 6% mark after a six-month hiatus

In the face of escalating inflation rates and rising interest costs, the mortgage market in the UK is experiencing significant changes.

The number of mortgage products available has seen a decrease, with 4,683 mortgages currently on the market, down from 4,923 just a few days ago. This drop in options comes as mortgage lenders have been increasing rates and pulling deals at a rapid pace in recent weeks.

The average rate for a two-year fixed mortgage currently stands at 6.01%, marking a notable increase compared to the past. In fact, this current rate is the highest it has been since 1 December 2022. Similarly, the average five-year fixed rate has climbed to 5.67%.

These rising rates have raised concerns among experts, with Sir Charlie Bean, former Bank of England deputy governor, cautioning against government intervention to protect mortgage holders from the impact of increasing rates. He warns that such action could be "risky."

Rishi Sunak, the Prime Minister, has expressed support for targeted help for mortgage holders facing pressure from rising interest rates. However, he emphasises the importance of fiscal responsibility and avoids widespread bailouts.

In an effort to address the issue, the government has introduced a mortgage guarantee scheme for first-time buyers. This scheme offers lenders a guarantee on mortgages to compensate for net losses in the event of repossession.

Despite the drop in mortgage product availability, there are still more options than the 3,890 available before the September mini budget. However, millions of people are struggling with rising costs-of-living, and the Prime Minister has refused to provide any support to those affected by the increase in mortgage rates.

In other related news, the UK's leading bank, Santander, has pulled mortgage deals for new borrowers. The Prime Minister, Rishi Sunak, has also announced his decision to decline extra support for mortgage holders.

Scott Graham, a renowned photographer, captures the associated image for this article.

The Bank of England interest rates are currently at 4.5%, and they are due to rise again on Thursday for the 14th time. The Prime Minister has stated that the best way to keep costs and interest rates down for people is to halve inflation.

As the economic landscape continues to evolve, it is crucial for individuals to stay informed and make prudent decisions regarding their financial commitments.