UK Mortgage Payers Face Biggest Squeeze in Decades as Interest Rates Rise

The average rate on a new five-year mortgage has ticked up to 5.54% and the rate on two-year mortgage fixes is even higher at 5.9%, which is the highest since 2000.

This increase in mortgage rates is projected to worsen as markets expect the Bank of England (BoE) to raise its official interest rate as high as 5.75% by the end of the coming year.

The BoE is behind the curve on the cost of living, and economists warn that with the UK facing potentially higher price rises than other leading economies, British interest rates could be higher for some time to come, raising the chances of a recession.