Rishi Sunak has ruled out extra help for UK homeowners struggling to pay soaring mortgage costs, as the average two-year fixed-rate loan rose above 6%.
The prime minister said the government should “stick to the plan” to halve inflation in its attempts to tackle the cost of living crisis, despite growing pressure on the Conservatives as households across the country face a surge in borrowing costs.
Mortgage rates have soared in recent weeks as the Bank of England’s attempts to cut stubbornly high inflation have fed through into lending deals. City investors widely expect the central bank to announce its 13th consecutive rate increase on Thursday this week in response to persistently high inflation.
Threadneedle Street is expected to raise its key base rate by at least a quarter point from the current level of 4.5%, extending its most aggressive round of interest rate increases in decades since lifting it from 0.1% in December 2021.
TSB became the latest high street bank on Monday to pull their cheapest mortgage deals, as high street lenders reacted to the prospect of higher Bank of England base rates by pushing up the cost of new home loans to the highest levels since the 2008 financial crisis.
The average rate on a two-year fixed-rate mortgage rose to 6.01% on Monday – the highest since 1 December – from 5.98% on Friday. The average five-year deal rose to 5.67% from 5.62%.
Speaking on ITV’s Good Morning Britain, Sunak said: “I know the anxiety people will have about the mortgage rates, that is why the first priority I set out at the beginning of the year was to halve inflation because that is the best and most important way that we can keep costs and interest rates down for people.