Kwasi Kwarteng, the chancellor is meeting bank chiefs at Number 11 Downing street today, as he seeks to address the tumultuous mortgage market.
The meeting comes at a critical moment. Average interest rates on 24-month fixed mortgages have risen above six per cent for the first time since the financial crash in 2008, according to new data.
Mortgage rates, which have been on the rise in recent months, took a sharp incline following the announcement of the government’s mini-budget almost a fortnight ago; financial data provider Moneyfacts said that the rate had reached 6.07 per cent yesterday, compared to 5.75 per cent on Monday.
Mortgage rates reached 6.31 per cent in November 2008, just weeks after the beginning of the financial crisis. On 23 September, the day the mini-budget was announced, however, the average rate was 4.74 per cent, while it was only 2.34 per cent in December last year.
The rise in the mortgage rate will affect first-time buyers, and those looking to remortgage their homes; homeowner’s monthly payments are expected to increase by hundreds of pounds in many cases.
According to Labour, homeowners could be forced to pay £498 more per month, and up to £915 more monthly in London and the southeast.
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“If [people with mortgages are] not on a fixed rate, of course they’re paying more as a direct result of the kamikaze politics of two weeks ago. That is just not fair,” Labour leader Keir Starmer told BBC local radio stations this morning.”
“The humiliating U-turn [the government was] forced into came too late – the damage had been done. Now we are all suffering the consequences. This was a crisis made in Downing Street but paid by working people,” Starmer added.
It’s an easy target for Starmer to attack but, as he knows all too well, interest rates are on the rise around the world. And have been for months.