UK faces major mortgage crisis

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The average two-year fixed mortgage rate for residential property buyers in the UK reached 6.01% on Monday, the highest level since December 2022, according to the main borrowing statistic for the housing market.

According to Moneyfacts, a real estate information source, the rate was 5.98% on Friday. A five-year mortgage rate has climbed from 5.62% to 5.67%.

The rise has reduced the number of available home mortgage offers. According to the data, there were 4,683 goods available on Monday, down from 4,923 on Friday.

Mortgage rates in the United Kingdom have risen dramatically in recent days, ahead of the Bank of England’s predicted interest rate hike later this week. In an effort to curb runaway inflation, the Fed is expected to raise borrowing costs for the 13th time in a row on Thursday.

More than a quarter of UK homeowners with fixed-rate mortgages are expected to see their monthly payments skyrocket when their current terms expire.

The Bank of England announced in May that 1.3 million fixed-rate mortgages would mature before the end of 2023, with a greater number up for renewal in 2024.

“The market is dysfunctional and, arguably, broken,” said Martin Stewart, director of mortgage advisory London Money, to CNBC. “We’ve seen evidence of advisers standing in lines with 2,000 others, all trying to secure something that may or may not exist by the time they get to the front of the line.”

According to the industry expert, the last nine months have been “seismic” for the mortgage and housing sectors, “on par with the financial crisis,” albeit for different reasons.