Mortgage costs have hit the highest level for 15 years after the rate on a two-year fixed deal surpassed the peak in the aftermath of the mini-budget.
The average rate on such a deal is now 6.66% – a level not seen since August 2008 and the financial crisis.
Mortgage costs have been soaring recently as lenders grapple with inflation and uncertainty over interest rates set by the Bank of England.
Lenders are being questioned by MPs about the impact on customers.
Bank and building societies bosses, including representatives from Lloyds and Nationwide, are in front of the Treasury Select Committee.
The hearing is covering mortgage stress faced by borrowers, lenders’ response to people falling behind on repayments and the wider impact on the UK housing market.
Lenders said people fixing deals at rates now would typically face an increase of about £350 a month in their repayments, but there remained relatively low numbers of people falling behind.
The committee is examining how mortgage-holders are trying to cope.
Mortgage rates have risen consistently and – at times – sharply over recent weeks, with the possibility of more increases to come.
Data on wages and rising prices mean markets anticipate that inflation and interest rates will stay higher for longer in the UK than previously expected, which has been reflected in the funding costs of mortgages.
That has pushed the typical two-year mortgage rate above the peak of October last year in the aftermath of the mini-budget during Liz Truss’s short-lived premiership, according to the financial information service Moneyfacts.
Mortgage rates 15 years ago hit 7%, as global economies were hit by a banking crisis.
The average rate on a five-year deal remains below the level seen after the mini-budget. The current level is 6.17%, compared to the peak last year of 6.51%.
