Home repossessions are set to soar further after mortgage rates nudged 6% yesterday.
The average two-year fixed-rate deal rose from 5.92% to 5.98% yesterday, with five-year deals up from 5.56% to 5.62%, Moneyfacts data shows.
Repayments were already taking up the biggest slice of new borrowers’ income in 15 years, at 20.4%, according to banking trade body UK Finance – and rates have continued to rocket since then.
The Lib Dems called for a £3billion emergency mortgage protection fund, paid for by reversing tax cuts for banks. Leader Sir Ed Davey said: “We’ve already seen repossessions surging by 50% in the latest quarter, and my worry is that we could be in a spiral of repossessions.”
The Bank of England could hike the base rate again next Thursday, from 4.5% to 4.75% – with 5% “not out of the question”, said Oxford Economics.
The average borrower taking out a new mortgage next year faces a £2,900 surge in annual repayments, the Resolution Foundation think-tank said.
