Mortgage rates: average five-year fix rises above 6%
4th July 2023 12:44
by Myron Jobson from interactive investor
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More mortgage misery for borrowers as affordability headache intensifies.
Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “The sudden surge in mortgage rates has been jarring for borrowers, and the latest uptick spells even more mortgage misery.
“It is a gut punch to the around 800,000 households with a fixed-rate mortgage deal set to expire in the second half of this year. Higher mortgage rates means borrowers end up shelling out more in interest over the life of their loans. This translates into higher monthly mortgage payments, which would weigh heavily on homeowners already struggling to battle the inflationary beast in other areas of expenditure such as food bills.
“Many borrowers will be desperately rubbing their figurative crystal ball to get an idea of where mortgage rates are heading in the not-too-distant future. When interest rates are on the rise, deciding between a short or long-term fixed-rate mortgage deal requires careful consideration. Ultimately the decision between a short or long-term fixed-rate mortgage depends on your individual circumstances. It is worth consulting a mortgage adviser to explore your options.
“The current recalibration in house prices is the only positive outcome of higher rates from a buyer’s perspective. The latest increase in mortgage rates threatens to shatter the resilience in house prices in June observed in Nationwide’s latest house price index. But the combination of higher mortgage rates and already inflated home prices has significantly limited what wannabe homeowners can afford, pushing many of them out of the market. This has a ripple effects on the rental market. With fewer home sales, more people will continue to rent, potentially causing rent costs to go up.”
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