The cost of a two-year fixed rate mortgage has climbed above 6% while the equivalent rate on a five-year fixed rate mortgage has reached 5.67% but the headline figures belie the pain that households really face.
We are now facing the worst mortgage squeeze since the housing crash of the 1990s.
At 13%, mortgage rates were much higher than they are now, but the size of the loans households were taking out relative to their incomes was also smaller.
It means 5.67% today is as painful as 13% in 1991.
That’s going to come as a shock to the 2.54 million homeowners whose fixed rate deals expire between now and the end of 2024, when the Bank of England’s base rate will be at its peak.
A year ago, they thought that they would have escaped the worst of it.
Now, it looks like they will be emerging into the eye of the storm.
Homeowners re-fixing in 2024 will have to find an extra £2,900 a year, on average, according to the Resolution Foundation.
Renters are unlikely to experience much respite because landlords will most likely try to pass on the extra costs to tenants.
In the five years from the end of 2021 to the end of 2026, homeowners will have paid an extra £15.8bn towards their mortgages, compared to the end of 2021.
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Nearly three fifths of that rise is still to come.
About £4.7bn of that will come in 2024 – bad news for a government gearing up for a general election.
The chancellor has already ruled out any direct support for households but the pressure for some type of action is growing.
It’s a difficult call because the government has also made halving inflation by the end of the year its primary policy aim.
Any fiscal support for homeowners not only counteracts the monetary policy of the Bank of England, but also risks stoking inflation even higher.