Mortgage borrowers in the U.K. began the week with a new degree of financial discomfort as the average two-year fixed mortgage rates for homebuyers hit 6.01% today, the highest level since last December. The rate was 5.98% on Friday, as per data from Moneyfacts.
This could be a summer of discontent for U.K. mortgage borrowers. According to combined media reports, the Bank of England – the nation’s central bank – is expected to enact its 13th consecutive interest rate hike on Thursday in its continued combat with high inflation. The BoE reported last month that 1.3 million fixed-rate mortgages were going to mature before the end of 2023 and more were being renewed in 2024 – unlike the U.S., U.K. mortgage borrowers renew their mortgages on a cyclical basis.
But if borrowers were expecting government assistance, their hopes were dashed by Chancellor of the Exchequer Jeremy Hunt, who nixed the idea of having the government provide direct monetary support to households facing increased mortgage costs. Hunt stated such assistance would increase government borrowing and force the BoE to raise rates higher. Instead, Hunt insisted that banks work directly with borrowers who are facing financial difficulties.
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