- Mortgage lenders brief MPs on impact of rising interest rates
- Average two-year fixed mortgage rate higher than a year ago
- Customers facing monthly payments exceeding £200 with new loan arrangements
MPs were also briefed by mortgage lenders on the impact of rising interest rates on consumers during an evidence session.
The average two-year fixed mortgage rate is higher a year after the government’s mini-budget disappointed financial markets.
MoneyfactsCompare analysts reported a 6.66 percent rate hike before MPs questioned mortgage businesses about the challenging market.
While arrears have not increased, new loan borrowers often had monthly installments over £200, bosses told the Treasury committee.
The average two-year rate increased from its peak of 6.65% on 20 October 2022, when lenders withdrew and re-priced products as their financing costs skyrocketed in response to the then-administration of Prime Minister Liz Truss’s growth plans.
The rate now rests at a level not observed since August 2008.
Mortgage rates, which regained some stability earlier in the year after the mini-budget, have accelerated sharply upwards this summer on expectations that the Bank of England must do much more to reduce inflation.
The Fed’s rate-hiking cycle continued after official statistics showed a surprising wage growth spike earlier in the day.
The committee of MPs asked representatives of Lloyds Banking Group, Santander UK, Skipton Building Society, Nationwide, and Paragon Banking Group to explain the assistance available to customers as budgetary pressures increase.
Andrew Asaam, director of homes for Lloyds, stated that the industry’s new mortgage charter introduced “clarity” and “consistency” to consumers.
For six months, struggling borrowers can make interest-only payments and extend their mortgage term to cut monthly payments.
In addition, mortgage lenders are prohibited from evicting homeowners less than a year after the first delayed payment.
It has been asserted that some market participants have purposely increased their rates to make them uncompetitive due to difficulties balancing high volumes of customer inquiries in a dynamic market.
The UK head of HSBC, Ian Stuart, told that the bank was working to increase its mortgage capacity after being compelled to temporarily withdraw its products from brokers.
Its rates at the time were among the finest available on the market.
Mr. Stuart referred to a “shock” for 300,000 HSBC borrowers coming off fixed-rate deals this year. Given that they confronted mortgage rates of approximately 1.5% at the time of origination.
