The average mortgage rate on a two-year fixed deal has now surpassed the peak in the aftermath of the mini-Budget last September.

Data published by Moneyfacts has shown that mortgage costs have now hit their highest level for 15 years.

The average rate on a two-year fixed rate mortgage deal is now 6.66% – a level not seen since August 2008 and the global financial crisis.

Mortgage rates have continued to soar amid uncertainty over interest rates, following succession of increases to the base rate set by the Bank of England (BoE). At it last meeting, the Bank’s Monetary Policy Committee increased the base rate to 5%.

Lenders are being questioned by MPs this morning in front of the Treasury Committee, with the hearing covering the mortgage stress faced by borrowers, the response to people falling behind on repayments as well as the wider impact on the UK housing market.

In response to this hearing, which began at 10.15am this morning, CEO of Market Financial Solutions, Paresh Raja, said: “Lenders cannot be blamed for increasing rates; their hands have been forced by the 13 consecutive hikes to the base rate, with more expected. Where lenders will come under scrutiny, however, is the frequency at which rates are changing and products are being pulled.

“It is no surprise that borrowers – and brokers, it should be acknowledged – are experiencing stress over securing a mortgage for a property purchase. They must feel as products are here one minute, gone the next.

“Lenders can combat this issue by offering greater assurances over how long a particular product will be available for applications, and generally improving their communication with regards to how they are navigating the current economic landscape. This is where more agile lenders in the specialist finance sector seem be excelling, and it is no surprise that bridging loan applications have experienced an uptick in demand in 2023 amid a somewhat chaotic mortgage market.”

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