Mortgage rates may hit 7% as rises are 'out of control'

Homeowners have been warned that Britain is heading for a mortgage-rate “disaster” as the average five-year fixed-rate deal jumped above 6 per cent for the first time since November.

- ADAM FORREST

Mortgage holders were told that fixed-rate deals could soar to 7 per cent this summer, with experts urging the Bank of England and Rishi Sunak’s government to rethink the use of “out of control” interest rates to tame inflation.

Mr Sunak is under pressure to offer more help for struggling mortgage holders, as the typical five-year rate on the market rose from 5.97 to 6.01 per cent according to financial data experts Moneyfacts. The average two-year fixed-rate mortgage also jumped from 6.42 per cent to 6.47 per cent. The rates are the highest seen since the mini-Budget fiasco overseen by Liz Truss and her chancellor Kwasi Kwarteng.

The grim figures come as:

It comes after the Bank of England pushed the UK base interest rate to 5 per cent last month in a bid to tame persistent inflation. Mortgage brokers warned of further pain if the Bank raises the base rate to 6 per cent in the months ahead, as the markets expect it to.

Paul Welch of LargeMortgageLoans.com said that swap rates – the rates the banks pay to borrow money – could push mortgage rates even higher. “It gives me no pleasure to say that we could realistically see some fixed rates reach 7 per cent before the summer is out,” he said.

Mortgage broker Riz Malik, founder of R3 Mortgages, told The