Rates on two-year fixed mortgages near 6% in fallout from mini-Budget as home loan costs jump and brokers warn of a second week of mayhem

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  • Mortgage rates have risen by nearly a full percentage point since the mini-budget was passed.
  • Brokers warn homeowners will face further chaos amid rising interest rates
  • Lenders have abandoned nearly 2,000 mortgage products in a bid to reprice deals

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Mortgage rates have risen by nearly a full percentage point in the ten days since the mini-budget was passed, figures showed today.

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Brokers have warned that a second week of chaos awaits homeowners as lenders grapple with market expectations of a sharp rise in interest rates.

The typical cost of a two-year fixed mortgage rose to 5.75% from 4.74% on September 23, the day of the announcement by Chancellor Kwasi Kwarteng.

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According to analysts at Moneyfacts, this is more than double the average rate of 2.34% in December last year.

Mortgage rates have risen by nearly a full percentage point in the ten days since the mini-budget was passed, figures showed today.

Meanwhile, the price of a five-year fixed-rate mortgage deal jumped to 5.48% today, compared to a mini-budget day average of 4.75%.

You can check which fixed rate mortgage deals can be offered to you and how much they will cost based on the size of your mortgage, the value of the house and how long you want to fix. with This is the best mortgage rate calculator on the L&C platform.

Last week, the real estate market was gripped by panic amid fears that the Bank of England will raise its base rate to 6% next year.

Last week, lenders waived nearly 2,000 mortgage products as they tried to renegotiate their deals to reflect a future rise in interest rates.

Some, including Virgin Money and HSBC, cautiously returned to the market late last week – but with inflated rates.

NatWest announced on Sunday that it is increasing its fixed-rate deals by 1.78 percentage points.

More than two million homeowners with term loans will remortgage by the end of 2024, according to data from the Bank of England. They will have to pay thousands more when the budgets are already undermined.

The Chancellor announced yesterday that he is reversing his most controversial policy by cutting the income tax rate by 45p.

Brokers reportedly received inquiries from clients asking if they could withdraw mortgage applications filed last week.

Experts say borrowers mistakenly hoped the chancellor’s reversal could prompt lenders to lower their rates over the next few weeks.

Dominik Lipnicki of Your Mortgage Solutions said: “The chancellor’s decision yesterday was political and will have little impact on the city. People are still in a lot of stress and panic as they begin to realize that they are facing a huge shock to their mortgage bills, which is inevitable at this point.”

The rate hike is likely to slow down real estate sales, said Dominic Agas, chief executive of real estate agency Winkworth. “This is what happens every time there is an increase in mortgage rates,” he told the Financial Times.

He added that the slowdown will be more dramatic in areas of the market where sales peaked during the pandemic, such as large vacation homes.

On the first day of last month, there were 3,890 mortgage products on sale. That dropped to about 2000, and yesterday that figure was 2262.

Rachel Springall, financial expert at Moneyfacts, said: “Borrowers may be concerned about a further decline in mortgage availability, but many lenders are very vocal about withdrawals being on a temporary basis amid interest rate uncertainty.

“Seeking advice from an independent broker would be a wise move, especially for those borrowers who have not yet started the mortgage process and who are put off by the level of choice and much higher mortgage rates than they might have expected.

“The next few weeks will be critical to see where lenders go, but we’ve already seen some new fixed deals since last week.”

What to do if you need a mortgage

Borrowers who need to find a mortgage because their current fixed-rate deal is coming to an end or because they have agreed to buy a home were urged to act, but not to panic. writes This is Money editor Simon Lambert.

Banks and building societies are still making loans and mortgages are still being offered, applications are being accepted.

However, rates are changing rapidly and there is no guarantee that deals will continue and not be replaced by mortgages with higher rates.

This is Money’s best L&C-based mortgage rate calculator that can show you deals that match your mortgage and property value.

What if I need to re-mortgage?

Borrowers should compare rates and speak with a mortgage broker and be prepared to act to secure the rate.

Anyone with a fixed rate deal ending within the next six to nine months should figure out what it would cost them to remortgage now and consider doing a new deal.

Most mortgage deals allow you to add fees to the loan, and they are charged only when you receive it. By doing this, borrowers can secure the rate without paying expensive arranging fees.

What if I buy a house?

Those with a house purchase arrangement should also aim to secure rates as soon as possible so they know exactly what their monthly payments will be.

Homebuyers should beware of overstretching and be prepared for home prices to fall from their current high levels as higher mortgage rates limit people’s ability to borrow.

How to compare mortgage rates

The best way to compare mortgage rates and find the right deal for you is to talk to a good broker.

You can use our best mortgage rate calculator to show you offers that match your home’s value, mortgage size, term, and fixed rate.

However, be aware that rates can change quickly, so the advice is that if you need a mortgage, compare rates and then speak to a broker as soon as…

Credit: www.dailymail.co.uk /

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