Your Money

How to cope with the mortgage crisis, by the experts

Whether you’re nearing the end of a fixed-term mortgage or a first-time buyer, four industry experts tell Rebecca Goodman how you can cope with the surging cost of borrowing

Thursday 27 July 2023 19:15 BST
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<p>Karen Noye (top left), Joe Stallard (top right), Mark Harris (bottom left) and Polly Tembo offer advice amid the mortgage squeeze  </p>

Karen Noye (top left), Joe Stallard (top right), Mark Harris (bottom left) and Polly Tembo offer advice amid the mortgage squeeze

Recent peaks in interest rates have spooked millions of homeowners and potential buyers and experts are predicting it to rise further.

It has pushed up the cost of borrowing – again – and comes in an environment where prices are rising across the board, from food and clothes to energy and travel. With stubbornly high inflation, the rise was not welcomed by borrowers, especially those already struggling financially.

Fixed-rate mortgage costs are continuing to rise, and the average two-year fixed deal now stands at 6.78%, according to Moneyfacts, up from 3.74 per cent a year ago. This is the highest level seen since the 2008 financial crisis. The average five-year fixed-rate mortgage is now 6.3 per cent, an annual rise from 3.89 per cent. While the average rate of a standard variable mortgage (SVR) is now 7.67 per cent, a significant rise from a year ago when it was 4.91 per cent and from the average of 4.41 per cent in June 2022.

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