UK mortgage rates continue to increase amid political chaos

UK mortgage rates keep hitting new thresholds as Liz Truss’ premiership edges closer to imploding.

The average five-year fixed-rate home loan rose to 6.51 per cent on Thursday (Oct 20), the highest since September 2008, said financial information company Moneyfacts Group. 

The relentless rise in mortgage costs is one of several headaches that PM Truss has faced since her tenure began last month, with many Tory lawmakers calling for her to resign after a failed economic growth plan roiled financial markets. Chancellor Jeremy Hunt this week axed almost all of the tax cuts, calming the gilts market.

The turmoil has had a knock-on effect on the property market. New home sales have slowed and buyer demand has dropped by almost a third since the mini-Budget.

The prices of shorter duration mortgage products also increased on Thursday, with the average two-year fixed-rate deal climbing to 6.65 per cent from 6.52 per cent – the biggest daily jump in over a fortnight and a 14-year high.

Truss’ sacking of Home Secretary Suella Braverman for a security breach and a push to pass legislation on fracking has put her premiership on the brink, with Cabinet ministers taking part in late-night conversations on Wednesday about whether her position remains tenable. BLOOMBERG