Mortgage ‘misery’ as average five-year deal soars above 6%

Homeowners have been warned of more mortgage rate ‘misery’ as the average five-year fixed-rate deal jumped above 6 per cent per cent for the first time since November. The typical rate on the market on Tuesday was 6.01 per cent, up from an average rate of 5.97 per cent on Monday, according to financial information website Moneyfacts. Rishi Sunak is under pressure to set out more help for struggling mortgage holders, as the average two-year fixed rate mortgage also jumped up from 6.42 per cent to 6.47 per cent. The last time five-year deals topped 6 per cent was in November last year, when rates rose sharply following Liz Truss and her chancellor Kwasi Kwarteng’s mini-budget fiasco. It comes after the Bank of England pushed the UK base interest rate to 5 per cent last month – the 13th time in a row that the central bank has pushed up rates in a bid to tame persistent inflation . The mortgage rate rises are like ‘rolling financial thunder’ that will cost hard-pressed families hundreds of pounds a month, according to Labour’s shadow chief secretary to the Treasury. Pat McFadden told GB News: ‘It’s really going to squeeze their spending in other areas. And it’s not just mortgage holders. It’s also renters too, because they’re renting from people whose  mortgages are also going up.’ The Liberal Democrats – again calling for a £3bn mortgage protection fund – urged the Sunak government to do more in response to climbing mortgage rates . ‘This is yet more mortgage misery for homeowners on the brink,’ said Treasury spokeswoman Sarah Olney. She added: ‘Rishi Sunak asking homeowners to hold their nerve is sounding more tin-eared by the day. Conservative ministers sent mortgages spiralling through all their chaos and incompetence, now they are refusing to lift a finger to help.’ No 10 acknowledged that it was a ‘very difficult time’ for both mortgage holders and renters. Mr Sunak’s official spokesman said: ‘The single biggest thing government can do is work together with the Bank of England in lockstep to reduce inflation, which is driving some of these high mortgage rates we are seeing.’ Sunak and Hunt under pressure to help homeowners Chancellor Jeremy Hunt agreed a deal with the big mortgage lenders at the end of June to provide more flexibility to those struggling with increased repayments. Under the terms, banks will allow customers who are up to date with their payments to switch to interest-only payments for six months or extend their mortgage term to reduce their monthly payments. But the government is under pressure to do more. Some Tory MPs suggesting ‘more generous’ loans to cover mortgage interest payments for Universal Credit recipients, while others have urged the PM and chancellor to bring back tax relief on mortgage interest. Mortgage brokers warned of further pain ahead this summer – with some predicting rates could soon top 7 per cent. Paul Welch of LoargeMortgageLoans.com said swap rates – those the banks pay to borrow money – look set to remain high, pushing mortgage rates even higher. ‘If core inflation doesn’t come down significantly this month, or God forbid rises, then interest rates and swap rates will continue to go up and up,’ he said. ‘It gives me no pleasure to say that we could realistically see some fixed rates reach 7 per cent before the summer is out.’ Peter Dockar of mortgage lender Gen H said ‘things may still get worse before they get better’, adding that homeowners and buyers ‘need and deserve better support from the government’. Homeowners remortgaging face interest rates soaring over 6% Mr Sunak will face questions on cost of living pressures and his promise to halve inflation as he comes under scrutiny from senior MPs on the liaison committee on Tuesday afternoon. It comes as Sainsbury’s said food inflation is ‘starting to fall’, but also warned that prices would not come down to what they were before the Ukraine war. The latest official figures show food inflation eased slightly in May but remained at a stubbornly high 18.4 per cent. Tory minister Johnny Mercer was asked on Sky News whether people were irritated about ‘billionaire’ Mr Sunak telling them to ‘hold their nerve’ during the  cost of living  crisis. Mr Mercer said the ‘class war stuff’ goes down badly with voters. He also claimed it is ‘not correct’ that people are forced to use food banks, suggesting that taking handouts is a personal choice. Tory minister Johnny Mercer says voters ‘don’t care’ if Sunak is a billionaire It comes as top bankers have been summoned to a meeting with the financial watchdog to discuss concerns surrounding interest rates for savers lagging behind the cost of mortgages. The Financial Conduct Authority (FCA) expects chief executives from HSBC, NatWest, Lloyds and Barclays to attend on Thursday amid allegations of ‘blatant profiteering’. But sources played down the likelihood of a charter being drawn up in the vein of the one agreed between Mr Hunt and mortgage lenders. MPs on the Treasury committee were stepping up their campaign to increase saving rates for lenders, which are failing to keep up with soaring mortgages. Senior Labour MP Angela Eagle said: ‘This blatant profiteering has been shocking, and it’s clear to me this behaviour is miles away from the incoming requirement for firms to treat their customers fairly and with respect.’ Meanwhile, the Tory chair of the Treasury select committee Harriett Baldwin said fuel retailers have ‘pocketed’ the 5p fuel duty price cut. She said it had ‘gone straight to the bottom line’ of firms.