Mortgage nightmare for Britons as brokers sound 'death-knell' for cheaper deals


The number of house seekers has fallen by 14 per cent on the five-year average

Sam Montgomery

By Sam Montgomery

Published: 03/07/2023

- 11:17

Last ditch scramble for affordable deals as 5 per cent two-year fixes face extinction

Britons are frantically scanning the market for the last few short term deals fixed below 6 per cent, as the mortgage market continues to slump.

With high demand propping up the market and Bank of England base rate rises showing no signs of relenting, lenders are continuing to pull their cheapest deals and reprice their offers higher.

The number of two-year 5 per cent fixed-rate mortgages has been drained by 32 per cent in just a week, according to data obtained by the i from Moneyfacts.

Last week, 27 per cent of all two-year fixes on the market were below 6 per cent, down from 40 per cent the week before and well below the 98 per cent recorded a year ago.

For sale signs

The Bank of England hiked rates for a 13th consecutive time to 5 per cent last month


The average two-year fixed-rate price has now rocketed to 6.4 per cent.

Currently, there are no two-year fixes below 5 per cent.

Ying Tan CEO of Habito (Subject to FCA approval) told GB News: "The relentless rise in the cost of two-year fix rate mortgages is worrying, especially for those who are coming to the end of their current deal period.”

Today, only 15 per cent are on variable rates meaning that the vast majority are insulated from extra cost posted by higher Bank of England base rates in the short term.

However, the 800,000 people set to remortgage their homes in 2024 will face an daunting jump in cost.

Looking at houses for sale shop window

Britain's debt-to-GDP ratio has risen above 100 per cent for the first time since March 1961


Jane King, a mortgage broker at Ash Ridge, told the i that the “death knell” has sounded for 5 per cent fixed-rate mortgages.

King said: “Everything is going up. Rates starting with a five are disappearing and we’re getting 6 per cent deals coming through instead.

“Lenders are selling out pretty quick. If you want a 5 per cent deal, get your application in today – because it could get pulled this evening.”

Though the five-year fixed-rate mortgage market has proved sturdier than its shorter term contemporary, prices are still a far cry from those seen a year ago.

Figures show that 63 per cent of five-year fixed-rate mortgages remained below 6 percent last week, slightly lower than the 65 per cent seen the week previous but far lower than the 98 per cent offered a year ago.

Sheldon Mills, executive director, consumers and competition for Financial Conduct Authority


Aaron Strutt, director at Trinity Financial, told the i: “There’s no getting away from the fact that deals below 5 per cent are really much harder to find.

“And there are probably still some lenders that are going to re-price, still, even though a lot of them have already increased their products since the base rate rose last week.”

“We’re in this never-ending cycle of rate increases at the moment. I think, until the Bank of England stops increasing the base rate, rates are going to continue to go up.”

The government has set out agreements made with the Financial Conduct Authroity and Britain's largest mortgage lenders in a policy paper called the Mortgage Charter.

The charter sets out guidance and reassures Brits that no borrowers will be forced to leave their home without consent unless in exceptional circumstances, for the duration of a year from their first missed payment.

With effect from 10th July customers approaching the end of a fixed rate deal will have the chance to lock in a deal up to six months ahead.

Offering advice to concerned customers, Ying Tan told GB News: “The new mortgage charter sets out standards that lenders will adopt when helping their customers, providing greater flexibility to manage their mortgage payments without impacting their credit file.

“Options such as extending their term or switching to interest only can all help to reduce monthly payments.

“However, there is not a one size fits all approach and it's never been more important to align yourself to a good mortgage broker during this challenging period to ensure you get the right advice."

Stubbornly high core inflation has risen to 7.1 per cent, the highest annual rate increase since March 1992.

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