Average mortgage rate rises above six per cent for two-year fixed deal - as families warned they face no help

19 June 2023, 08:58 | Updated: 19 June 2023, 09:13

Around 1.6 million fixed-rate mortgage deals are expected to expire in 2024
Around 1.6 million fixed-rate mortgage deals are expected to expire in 2024. Picture: Alamy
Kieran Kelly

By Kieran Kelly

The average mortgage rate for a two-year fixed deal has risen above six per cent.

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The average five-year fixed rate mortgage has also increased to 5.67 per cent, according to financial information company Moneyfacts.

Mortgage rates soared to six per cent last year following Liz Truss and Kwasi Kwarteng's mini budget, though fell slightly afterwards.

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Families who are struggling with skyrocketing mortgage costs are not expected to be given no direct support from the government, according to those close to the Chancellor.

It comes as soaring prices mean those coming off fixed-rate mortgage deals next year could face an added bill of almost £3,000 each year.

It's thought around 1.6 million fixed-rate mortgages will expire in 2024, according to think tank the Resolution Foundation.

Housing secretary Michael Gove said that a range of options including direct support were "under review".

But this was contradicted by allies of Chancellor Jeremy Hunt, who have said that no direct help will go ahead.

Read more: Annual mortgage repayments set to rise by almost £3k next year

Read more: British nationals to get 'priority over migrants' for council houses

They told the FT: “Borrowing money to subsidise mortgages risks fuelling inflation further, forcing the Bank of England to respond with higher interest rates. It would be totally self-defeating.”

Interest rates are now expected to peak at nearly 6 per cent in mid-2024, the Resolution Foundation predicted.

It comes as banks continue to pull mortgage deals from the market and replace them with new ones with higher rates.

Annual repayments are now on track to be £15.8 billion a year higher by 2026 compared with prior to the Bank's rate-tightening cycle starting in December 2021.

Rachel Johnson says Tory's 'biggest crisis' to tackle is increasing mortgage rates

A Treasury spokesperson said on Saturday: "We know this is a concerning time for mortgage holders, which is why the FCA (Financial Conduct Authority) requires lenders to offer tailored support to borrowers struggling to make their payments, and we continue to support mortgage holders through the Support for Mortgage Interest scheme.

"Behind this though is global inflation, continuing to eat away at incomes around the world, which is why the single biggest thing we can do to help families is to halve the rate this year.

"We are also supportive of the Bank of England in their independent decisions on interest rates, and continue to provide around £3,300 per household this year and next to help with rising costs."

Ben Kentish hears from caller whose mortgage has doubled

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