The U.K.’s average two-year fixed residential mortgage rate reached 6.66% today, the highest level since August 2008 when it soared to 6.94%.
According to a Reuters analysis of data from Moneyfacts, today’s rate is slightly above the 6.65% from last October that was sparked by the “mini-budget” crisis created by then-Prime Minister Liz Truss’ government.
U.K. lenders including Nationwide, Lloyds Bank and Santander told the members of Parliament’s Treasury Committee that mortgage payment arrears were up slightly, although they were still below pre-pandemic levels.
“Undoubtedly, households and customers are feeling the effect of not just mortgage rates increasing but the wider cost of living crisis,” said Andrew Asaam, homes director at Lloyds Banking Group. “But arrears remain very low in a historical context, and still below what we’d have seen pre-Covid.”
Reuters also reported the trade organization U.K. Finance has predicted 800,000 Britons will need to refinance loans in the second half of this year, and 1.6 million more will need to follow suit in 2024. A study by the think tank Resolution Foundation determined the average U.K. homeowner who refinances a home loan in 2024 will have to pay an extra $3,732.88 a year.
