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Homeowners have been warned of more mortgage rate “misery” as the average five-year fixed-rate deal jumped above 6 per cent per cent for the first time since November last year.
The typical rate on the market on Tuesday was 6.01 per cent, up from an average rate of 5.97 per cent on Monday, according to financial information website Moneyfacts.
Rishi Sunak is under pressure to set out more help for struggling mortgage holders, as the average two-year fixed rate mortgage also jumped up from 6.42 per cent to 6.47 per cent.
The last time five-year deals topped 6 per cent was in November last year, when rates rose sharply following Liz Truss and her chancellor Kwasi Kwarteng’s mini-budget fiasco.
It comes after the Bank of England pushed the UK base interest rate to 5 per cent last month – the 13th time in a row that the central bank has pushed up rates in a bid to tame persistent inflation.
The mortgage rate rises are like “rolling financial thunder” that will cost hard-pressed families hundreds of pounds a month, according to Labour’s shadow chief secretary to the Treasury.
Pat McFadden told GB News: “It’s really going to squeeze their spending in other areas. And it’s not just mortgage holders. It’s also renters too, because they’re renting from people whose mortgages are also going up.”
The Liberal Democrats – again calling for a £3bn mortgage protection fund – urged the Sunak government to do more in response to climbing mortgage rates. “This is yet more mortgage misery for homeowners on the brink,” said Treasury spokeswoman Sarah Olney.
She added: “Rishi Sunak asking homeowners to hold their nerve is sounding more tin-eared by the day. Conservative ministers sent mortgages spiralling through all their chaos and incompetence, now they are refusing to lift a finger to help.”
Sunak and Hunt under pressure to help homeowners
(Downing Street)
Chancellor Jeremy Hunt agreed a deal with the big mortgage lenders at the end of June to provide more flexibility to those struggling with increased repayments.
Mr Sunak will face questions on cost of living pressures and his promise to halve inflation as he comes under scrutiny from senior MPs on the liaison committee on Tuesday afternoon.
It comes as Sainsbury’s said food inflation is “starting to fall”. However, the latest official figures show food inflation eased slightly in May but remained at a stubbornly high 18.4 per cent.
Tory minister Johnny Mercer was asked on Sky News whether people were irritated about “billionaire” Mr Sunak telling them to “hold their nerve” during the cost of living crisis.
Mr Mercer told host Kay Burley: “I’ve got to be honest, the whole sort of class war stuff against the prime minister really goes down badly in places like mine, which is one of the most deprived constituencies in the UK.”
Homeowners remortgaging face interest rates soaring over 6%
(PA)
It comes as top bankers have been summoned to a meeting with the financial watchdog to discuss concerns surrounding interest rates for savers lagging behind the cost of mortgages.
The Financial Conduct Authority (FCA) expects chief executives from HSBC, NatWest, Lloyds and Barclays to attend on Thursday amid allegations of “blatant profiteering”.
But sources played down the likelihood of a charter being drawn up in the vein of the one agreed between Mr Hunt and mortgage lenders.
MPs on the Treasury committee were stepping up their campaign to increase saving rates for lenders, which are failing to keep up with soaring mortgages.
Labour’s Angela Eagle said: “This blatant profiteering has been shocking, and it’s clear to me this behaviour is miles away from the incoming requirement for firms to treat their customers fairly and with respect.”
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