The average two-year fixed mortgage now sits at 6 per cent, according to financial data group Moneyfacts – just below the 6.65 per cent reached in December last year, after the fallout from Liz Truss’s mini-Budget. Five-year fixed rates aren’t too far behind, at 5.7 per cent. For many of the 2.4 million homeowners whose mortgages are up for renewal between now and the end of next year, this is, at best, cause for alarm. At worst, it’s an alert to a crisis.
Later this week, we’ll get last month’s inflation data – and the next rate update from the Bank of England. Threadneedle Street’s dilemma is only getting worse. Between core inflation rising last month (from 6.1 per cent on the year last April to 6.8 per cent two months ago) and last week’s labour market update – which saw record pay hikes in nominal terms – expectations for peak rates have been rising, up to nearly 6 per cent.
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