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The rate for two-year fixed mortgage pass 6% mark for first time since 2008

The average rate on a new two-year fixed mortgage has risen above 6% for the first time since 2008, according to data that will intensify concern about the crisis in the home loans market.

News that the typical new rate had climbed to 6.07% came the day before the chancellor, Kwasi Kwarteng, was due to meet with executives from Britain’s biggest banks to discuss the impact of the financial markets turmoil on mortgages and availability.

Moneyfacts, a financial data provider, said the average new two-year fixed rate had risen again and broken through 6% on Wednesday. It went up to 5.97% on Tuesday, having already risen to 5.75% on Monday.

The average two-year fix has increased from an average of 4.74% on 23 September, the day of the mini-budget. At the start of December last year the average was 2.34%.

Moneyfacts said the last time the rate was 6% or more was in November 2008, when it reached 6.31%. That was weeks after the collapse of Lehman Brothers and the start of the financial crisis.

Soaring mortgage rates mean some homeowners’ monthly payments are increasing by hundreds of pounds. Someone who took out a £200,000 25-year repayment mortgage at a rate of 2.34% would be repaying £882 a month. On a rate of 6.07%it would be £1,297 – £415 more.

There had been hopes that the government’s 45p tax U-turn on Monday and the slightly calmer market conditions that have followed would translate into slightly cheaper new mortgage deals.

So far the opposite has happened, although some mortgage brokers said lenders needed time to react to the fast-moving situation and predicted some would start trimming their rates over the next week or fortnight, assuming the markets remain relatively stable.

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