Economics: UK housing back in the spotlight

Mortgage rates are now back to mini-Budget levels

Sticky inflation data and the Bank of England’s 50bp June hike have sent 2-year and 5-year mortgages rates back to levels last seen in the aftermath of the mini-Budget. For those facing imminent mortgage renewal, the outlook isn’t encouraging. 

Broad economy impact will be noticeable

Monthly bills could jump by nearly half for those forced to renew at 6%. And that’s enough to lift interest payments as a share of whole-economy household disposable income by three-quarters of a percentage point over the next year.

Policymakers won’t want to blunt their primary inflation-fighting tool

Some of the support measures agreed by mortgage lenders and the Chancellor will help. But a bigger support package is unlikely. Blunting their primary inflation-fighting tool just won’t be acceptable at this point.