The government’s mini budget has sent the average mortgage borrower’s bill soaring by £1,500 a year, new figures have shown, in a hike that has been dubbed a ‘Kwarteng premium’ by some brokers.
Average mortgage rates on a two-year fixed-rate deal jumped by a percentage point last Monday to 5.75 per cent, up from 4.74 per cent on the day of the mini-budget, financial data service Moneyfacts said.
It comes as lenders scrambled to reprice their products in the wake of Kwasi Kwarteng’s budget, which sent forecasts of interest soaring to six per cent next year.
Rate on a two year deal have been rising this year as the Bank has hiked interest rates in an effort to tame rampant inflation. In December, the average two-year fixed deal was 2.34 per cent.
Aaron Strutt, a mortgage broker from Trinity Financial, told the Times the rapid rise in rates since the mini-budget could be described as a “Kwarteng premium”.
Analysis by the Times showed that monthly repayments on a £200,000 home loan rose by £124 a month to £1,167 — £1,486 more a year.