Home Business Fixed mortgage rates largely unchanged despite shock interest rise

Fixed mortgage rates largely unchanged despite shock interest rise

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Chancellor Jeremy Hunt has met with the main mortgage lenders after rejecting financial support for mortgage holders despite higher interest rates making payments more expensive.
Business reporter
Friday 23 June 2023 11:44, UK
Average fixed mortgage rates are largely unchanged following the Bank of England’s shock announcement of a 5% base interest rate, according to a financial information company.
There has been no change to the average mortgage rate for a two-year fixed deal, Moneyfacts data showed. The rate has remained at 6.19%, the same as the day before.
Only a small increase was recorded for a five year fixed deal – the figures showed the average rate crept from 5.82% on Thursday to 5.83% on Friday.
The rising average rates seen through June and late May may explain why no dramatic increases came on Friday.
Lenders had been pricing in expected rate rises to their offering as inflation proved stubborn, adding pressure on the Bank of England to do more to bring price rises down through increasing interest rates.
Moneyfacts said it had one of the biggest daily rises in the average two year fixed mortgage rate in June since the start of 2023.
Overall the rates are still a marked increase from the years of ultra low interest rates. Less than two years ago, in October 2021, the average rate on a five year deal was 2.55%.
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„The average two-year fixed rate has seen several notable daily uplifts in June, compared to the rest of 2023, so it is possible there may be a bit more stability surrounding price hikes moving forward over the next few days,” Rachel Springall of Moneyfacts said.
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A fall in the number of mortgages on the market was recorded by Moneyfacts but the decrease was comparatively small.
On Friday there were 4,444 mortgages on offer, compared to 4,507 on Thursday. It is still more than were on offer before the Liz Truss government’s September mini-budget.
The majority of mortgage holders are on fixed rate deals, likely to be impacted by the Bank of England’s latest „shock” interest rate rise, which brought the base interest rate to 5%.
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More than 2.4 million fixed-rate deals will expire from now to the end of 2024, UK Finance, the banking industry trade body, said.
It comes as Chancellor Jeremy Hunt met mortgage lenders on Friday to see what support they can offer those in arrears and people struggling with more expensive mortgages.
The meeting contained „good working level discussions” according to Charlie Nunn, Lloyd’s chief executive.
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