 to borrow over 10 years than Britain (4.67%). This does not reflect solvency fears, but it is a judgement for UK authorities on whether inflation is under control. This week the government borrowed effectively £4bn over two years from the markets at a gilt auction. It had to pay, at 5.7%, the highest rates this century over two years, the second highest this century on any UK government bond. Added to all of this, interest rates are higher for the government to borrow over two years than it is over 10 years. That's unusual and often a sign of a coming recession. In the jargon, the yield curve is "inverted". This is very consequential for banks' business models, their savings rates, and risks to their funding or liquidity. All of this provides the backdrop for those mortgage lending rates. The move so far from just above zero to 5% is the "biggest and fastest move any of us can remember" according to Andrew Bailey, the Governor of the Bank of England. So){kind=link}
The black clouds are rising above the mortgage market.
House prices are beginning to show notable annual falls. Fixed mortgage rates now mostly start with a 6%.
The City is starting to predict a prolonged peak in UK base interest rates of 6.5%, with some seeing a case for 7% rates.
In financial markets, the UK is starting to diverge from other western economies: longer term borrowing rates for government are now at 15-year highs, above where they got to after the ill-fated Liz Truss mini budget.
While this is not a panic, it is a notable squeeze; the result of market perceptions that sticky UK inflation in particular will mean higher rates for longer in the UK.