
The typical two-year fixed mortgage deal has reached an interest rate of more than 6 per cent
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Interest rates are now expected to rise by more than expected
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The typicaltwo-year fixed mortgage deal has reached an interest rate of more than 6 per cent for the first time since December.
Homeowners seeking a new deal have seen prices surge as mortgage lenders increased rates and scrapped deals at a rapid rate over recent weeks.
Interest rates are now expected to rise by more than expected, pushing up borrowing costs due to high inflation and strong pay growth figures.
In a bid to slow price rises, interest rates have increased 12 times since 2021.
According to the financial information service Moneyfacts, the average rate for a two-year fixed-rate mortgage stands at 6.01 per cent.
Following Liz Truss' disastrous autumn mini-budget, mortgages soared to 6.65 per cent before reducing slightly.
However, rates have climbed sharply again recently with a typical five-year fixed rate at 5.67 per cent compared with last year's peak of 6.51 per cent.
More than 400,000 people will see their existing fixed deals end between July and September.
The base rate, set by the Bank of England's Monetary Policy Committee, will be reviewed on Thursday and is widely expected to increase for the 13th time in a row.
However, over the weekend a former deputy governor of the Bank, Sir Howard Davies, argued that it should "wait and see" to see the full effect of the rate rises made so far.
"We have a mortgage market where most people are on a fixed rate - when you put up interest rates you only have an impact on the small number of people paying the variable rate and on the people whose fixed rate happens to come up for renewal," he told the BBC."
So it's arguable the interest rate rises we've already seen have not yet fed fully through into the impact onto consumer spending."
Rates have climbed sharply with a typical five-year fixed rate at 5.67 per cent compared with last year's peak of 6.51 per cent
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Predictions that interest rates will stay higher for longer have been reflected in the funding cost of mortgages, hitting new borrowers, and those trying to remortgage.
Lenders have been scrapping deals and putting up rates at short-notice, while some have been inundated with demand and so forced to pull or raise rates again.
Households now face the prospect of having to budget for monthly repayments as interest rates surge.
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