Homeowners face fresh blow as average fixed mortgage tops six per cent

HOMEOWNERS faced more misery today as the average five-year fixed mortgage rate rose above six per cent for the first time in a decade.

The grim news came as Kwasi Kwarteng was holding crunch talks with high street mortgage lenders after his mini-budget sparked economic mayhem, forcing the Bank of England to intervene and sending mortgage rates rising sharply.

Before the meeting, the Chancellor was warned by a senior MP that the Tories could face a “wipe-out” at the next general election if his plans lead to people losing their homes and small firms going bust.

Data from analysts Moneyfacts showed the average rate on a fiveyear fix, one of the most popular mortgage products, rose from 5.97 per cent yesterday to 6.02 per cent today, the highest in 12 years.

On the day of the Chancellor’s speech less than two weeks ago it was 4.75 per cent and a year ago they were at 2.55 per cent.

Average two-year fixes broke through six per cent yesterday and today stood at 6.11 per cent, the highest since November 2008.

The increases mean millions of homeowners face huge mortgage bill increases when their current deals come to an end.

An estimated 1.3 million households will have to remortgage next year because their fixes have

expired. With some lenders stressing that withdrawal of some rates were temporary, Moneyfacts finance expert Rachel Springer said: “Fixing for longer may seem more appealing, particularly as both the average two and five year fixed rates rise to levels not seen in over a decade. Consumers must carefully consider whether now is the right time to buy a home or to wait and see how things change in the coming weeks.”

Amid the economic turmoil, Liz Truss vowed in her speech to the Conservative conference yesterday to guide Britain “through the tempest” and get the country thriving with a “growth, growth, growth” strategy.

Senior Tory Sir Roger Gale told Times Radio: “If Mrs Truss and her Chancellor pull this off, if we get the growth, if there is genuinely more money in people’s pockets, and people start to feel better then there is absolutely no reason why we should not win the next election, even from the point that we are at the moment.”

But the Thanet North MP, who was first elected to Parliament in 1983, added: “If people start losing their homes as a result of higher mortgage repayments and if small businesses crash because they can’t afford the interest on the debt that they are having to repay, then we could be wiped out.”

The Conservatives are up to 33 points behind Labour in the polls.

Ex-Cabinet minister Nadine Dorries, a close ally of Boris Johnson, has urged the new PM to change course or risk a “wipe-out” election defeat.

Tory party chairman Jake Berry today hit back at her criticism and sought to focus on the £60 billion support package to keep down energy bills for households and businesses this winter. He told Times Radio: “It’s very likely if you look at global trends that interest rates set by the independent Bank of England would have gone up over the coming months ahead in any event, so imagine if the Government hadn’t have acted.

Imagine if families were faced with a £6,000 energy bill that they couldn’t afford and their mortgages going up.”

Ms Truss was today meeting fellow European leaders at a summit in Prague where she was due to call for unity to “address the fundamental causes” of energy and migration challenges.

According to the Financial Times, US bankers are now eyeing British pension funds who could be forced to sell assets on the cheap after the mini-budget, which triggered such chaos in the sector that the Bank of England had to step in to ensure financial stability in Britain.

In a further blow to the Chancellor, left, ratings agency Fitch has lowered the outlook for its credit rating for British government debt to “negative” from “stable”.