Mortgage Rates Soar to 6% as Inflation Fears Drive Interest Rate Hikes

The average mortgage rate for a five-year fixed deal has risen to 6.01%, according to Moneyfacts.

Meanwhile, the average two-year fixed rate mortgage has increased to 6.47%.

This is a marked increase from the years of ultra-low interest rates.

The majority of mortgage holders are on fixed rate deals, and 2.4 million of these deals will expire from now to the end of 2024.

Mortgage rates have been rising significantly since May when inflation data showed the rate of price rises was not coming down as quickly as expected.

This led markets to expect the Bank of England would raise the base rate interest rate, which it did, hiking it to 5% last month and another hike is forecast to come on 3 August, bringing the rate to 5.5%.

The increase in interest rates is intended to bring inflation down to 2%.

The government and the Bank of England are working together to reduce inflation, which is contributing to higher mortgage rates.

The government has specific support available for mortgage holders in the short term.