Chancellor Kwasi Kwarteng 's U-turn over axing the 45% personal tax rate is unlikely to prevent mortgage rates soaring, experts have warned.
The interest rate on Government debt - which impacts mortgage costs - fell briefly after Mr Kwarteng scrapped plans to ditch the 45p rate of income tax, while the pound also strengthened against the dollar. But with financial markets unsettled by the Government’s wider unfunded tax-cutting plans, experts warn that the turmoil is set to continue.
More than 40% of all mortgage products were pulled after the Chancellor’s mini-Budget triggered a slump in the pound and fears of interest rate hikes. The average two-year fixed mortgage rate is now close to 6% with a typical two-year fixed deal currently 5.75%, up from 4.74% on the day of the mini-Budget, according to financial information service Moneyfacts.
