0 
0 The average rate on a new two-year fixed mortgage has risen above 6% for the first time since 2008, according to data that will intensify concern about the crisis in the home loans market.
News that the typical new rate had climbed to 6.07% came the day before the chancellor, Kwasi Kwarteng, was due to meet with executives from Britain’s biggest banks to discuss the impact of the financial markets turmoil on mortgages and availability.
Moneyfacts, a financial data provider, said the average new two-year fixed rate had risen again and broken through 6% on Wednesday. It went up to 5.97% on Tuesday, having already risen to 5.75% on Monday.
The average two-year fix has increased from an average of 4.74% on 23 September, the day of the mini-budget. At the start of December last year the average was 2.34%.
Moneyfacts said the last time the rate was 6% or more was in November 2008, when it reached 6.31%. That was weeks after the collapse of Lehman Brothers and the start of the financial crisis.
Soaring mortgage rates mean some homeowners’ monthly payments are increasing by hundreds of pounds. Someone who took out a £200,000 25-year repayment mortgage at a rate of 2.34% would be repaying £882 a month. On a rate of 6.07%it would be £1,297 – £415 more.
There had been hopes that the government’s 45p tax U-turn on Monday and the slightly calmer market conditions that have followed would translate into slightly cheaper new mortgage deals.
So far the opposite has happened, although some mortgage brokers said lenders needed time to react to the fast-moving situation and predicted some would start trimming their rates over the next week or fortnight, assuming the markets remain relatively stable.
Lenders effectively pulled down the shutters on new mortgages after the financial turbulence caused by the mini-budget sent the interest rate on government borrowing surging, withdrawing 40% of deals last week. Most of the biggest players have re-entered the market, but their new offerings are typically much pricier: for example, some of NatWest’s new two-year fixes were increased from 4.28% to 5.62%.
Unusually, the average new five-year fixed mortgage rate is lower than the typical two-year cost, at 5.97% as of Wednesday – although it is up from 5.75% just 24 hours earlier.
Moneyfacts also said the number of new standard mortgage deals available rose very slightly on Wednesday to 2,371, up from 2,358 a day earlier.
A spokesperson said: “Fixing for longer may seem more appealing … Consumers must carefully consider whether now is the right time to buy a home or wait and see how things change in the coming weeks.” They added: “It’s essential they seek advice to assess the deals that are available to them right now.”
Some mortgage brokers have been attempting to calm worried borrowers. Private Finance said that while the mortgage market had “entered unprecedented times” after the mini-budget, “we would like to reassure everyone the recent activity … is not a mortgage crisis, and banks are still willing to lend”.
Sky News reported that executives from Britain’s biggest high street lenders had been summoned for Treasury-convened talks with Kwarteng on Thursday, with bosses from Barclays, Lloyds Banking Group and NatWest among those expected to attend.
After lenders pulled mortgage deals en masse in the days after the mini-budget and in many cases repriced them upwards, Nikhil Rathi, the chief executive of the Financial Conduct Authority, told the Sunday Times the regulator was being “incredibly vigilant” about the impact on households from higher rates.
He added that banks would have to explain when products would be back on the market, saying: “If a product is withdrawn for a temporary period, we want to understand when they’re going to come back to market, so that those people who may need to refinance are able to proceed with their plans.”
