UK Mortgage Rates Rise Again As Kwarteng Bids to Gain Tory Trust
The average five-year fixed-rate mortgage on a home rose to 6.19%, the highest since November 2009 and up from 5.48% a week ago.
Britain’s mortgage costs continued to climb on Monday as Chancellor of the Exchequer Kwasi Kwarteng prepares to address restless Tory politicians in a bid to regain the trust of his party on his handling of the economy.
The average five-year fixed-rate mortgage on a home rose to 6.19%, the highest since November 2009 and up from 5.48% a week ago, according to Moneyfacts Group Plc. The average two-year fixed-rate deal rose to 6.31%, the highest since November 2008, after breaching the 6% threshold for the first time in almost 14 years last week.
Kwarteng plans to meet with backbench MPs at a gathering of the Conservative Party’s influential 1922 Committee on Wednesday, Bloomberg News has reported. Lawmakers are returning to Parliament on Tuesday for the first time since Kwarteng’s controversial fiscal statement on Sept. 23, which triggered a market rout and led to a fractious Tory conference.
Banks, meanwhile, have pulled more than 40% of mortgage products from the market as they adjusted to higher costs. The chancellor met with bosses of UK banks last week to discuss issues following his mini-budget.
Executives from mortgage giants including Lloyds Banking Group Plc and NatWest Group Plc highlighted stress among customers with buy-to-let and interest-only mortgages, while discussing measures to help including extending the Mortgage Guarantee Scheme, a program that helps first-time buyers purchase a property and is due to expire at the end of 2022.
Still, one positive for the government is that rising mortgage bills won’t hit as many voters as they did in the past, according to the Resolution Foundation. Only 28% of UK households have a mortgage compared with 43% in the nineties, largely due to plummeting home ownership among the young.
Among Tory voters, just one in three have a mortgage, the Resolution Foundation wrote on Oct. 7, due to an older and wealthier pool of followers who own their properties outright. The politics and economics of rising interest rates will be a crucial factor in the years ahead, the think tank added.
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.