Growing mortgage turmoil spells trouble for Sunak

Is the ghost of Liz Truss rattling her chains and spooking the mortgage market? It probably feels like that for borrowers.

- JAMES MOORE

The price of both two- and five-year fixed loans has leapt in recent days, while the number of deals on offer has tumbled as lenders withdraw their products.

The latest data from Moneyfacts indicates 4,686 deals on the market compared to a high of 5,385 on 22 May, just a couple of weeks ago.

It shows how quickly prices have risen; the average rate for a two-year fixed mortgage is now 5.72 per cent - the highest since last December when the Liz Truss premium was still much in evidence. Only this time last week, it was 5.34 per cent.

Five-year deals are generally cheaper (reflecting an expectation that rates will fall further out) with the average coming in at 5.41 per cent but that too is sharply higher than the 5.01 per cent available a week ago.

To put things in perspective, the peaks in the wake of the Truss/Kwarteng mini-Budget were 6.47 and 6.32 per cent. Borrowers who took the plunge then must be feeling sorely vexed.

The catalyst for all of this is the very real fear that base rates will peak at a much higher level than had previously been expected as a result of Britain's stubbornly high inflation.