June 23, 2023

A residential property’s typical two-year fixed rate mortgage in Britain increased from 5.98% on Friday to 6.01%, its highest level since December 1.
“We are now in the unenviable position of staring over the abyss where the bodies of the over-leveraged, under-saved, landlords, renters, and owners of discretionary spend businesses are beginning to pile up,” said Martin Stewart, director of mortgage advice London Money.
Markets are pricing in peak interest rates of close to 6% and short-term U.K. bond yields are at a 15-year high.

Experts warned that as the number of options offered declines and mortgage costs rise, U.K. borrowers face a precipice that might harm the economy.

The average two-year fixed rate mortgage on a residential property in Britain increased from 5.98% on Friday to 6.01%, its highest level since December 1, according to new data from the financial research business Moneyfacts.

The increase in prices in late 2022 followed the government’s market-shaking mini-budget. Two-year fixed rates were last above 6%, according to Moneyfacts, in November 2008.

There are now 4,683 fewer residential mortgage products available than there were on May 1 (5,264).

The last nine months have been “seismic” for the mortgage and housing sectors, “on a par with the financial crisis,” according to Martin Stewart, director of mortgage adviser London Money, but having different root reasons.

“The market is arguably broken and inefficient. According to Stewart, there have been instances where advisers have stood in lines with 2,000 other people in an effort to obtain items that may not even exist by the time they reach the front of the line.

For context, “pretty much everything is starting with a 5 now… everything started with a 1 or lower two years ago.”

According to Moneyfacts, the average interest rate for a five-year mortgage is currently 5.67%.

Prime Minister Rishi Sunak said on Monday, when asked about assistance for poor families, that the government’s first objective was halving inflation and that it needed to “stick to the plan.”

Source: CNBC
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