Full list of mortgage help you can get NOW as interest rates on brink of 6% – including Universal Credit scheme
MORTGAGE rates are on the brink of hitting 6% as lenders continue to hike the cost of deals.
The typical two-year fixed-rate deal jumped from 5.92% on Thursday to sit at 5.98% on Friday, according to MoneyFactsCompare.
Meanwhile, the average five-year fixed-rate mortgage increased from 5.56% on Thursday to 5.62% on Friday.
Mortgage rates previously rocketed amid market turmoil after the mini-Budget in September 2022.
Average two and five-year fixed mortgage rates topped 6% last autumn, before later settling down.
But dozen of lenders have been pulling deals and upping fixed rates in the last couple of weeks.
Read more in money
Nationwide and NatWest both upped their mortgage rates this morning.
The hikes have been significant, with some lenders adding up to 0.85 percentage points onto fixed rates.
Rachel Springall, a finance expert at Moneyfactscompare.co.uk, said: “Amid interest rate rises, fixing for the longer term may be an attractive choice for those who want peace of mind with their mortgage repayments.
“However, whether now is the time to take out a new deal really will depend on someone’s circumstances, particularly for first-time buyers who may be struggling to build a deposit and who have limited disposable income.
Most read in Money
“That said, because of higher house prices, those remortgaging may find they have more equity in their home to drop down into a lower loan-to-value bracket, where more competitive interest rates could be found.”
Those currently on fixed rates will not he affected until they come to the end of their deal.
Millions of borrowers are set to come to the end of a deal they locked in back when rates were at historic lows.
Richard Donnell, director of research and insight at Zoopla said: “Mortgage rates are rising because of higher-than-expected inflation.”
He continued: “Rising mortgage rates will hit the buying power of new buyers who don’t have a mortgage arranged. Those that have got offers locked in at closer to 4% will most likely push ahead with purchases where they feel secure in their work and/or need to move for job or family reasons.
“Those who were going to move but for less needs-based reasons may look to pull out of deals and wait over the summer.
“For those with a home and re-mortgaging, there will be a jump in mortgage costs as people move from sub-2% or 3% to 5% mortgage rates.
“Some homeowners are injecting cash to pay down debt to reduce loan repayments at higher rates.
“Others may have to look to extend mortgage terms by two to five years to reduce the increase in repayments – this is a solution but comes with the cost of paying more interest to the bank.”
Last month the Office for National Statistics revealed that inflation dropped to 8.7% in April.
But the fall had been expected to be far greater, with experts expecting it to drop to 8.2%.
As a result, the Bank of England (BoE) is under more pressure to raise the base rate again.
In May it went up for the twelfth time in 18 months, to 4.5%.
The BoE meets next week, Thursday June 22, and is expected to hike the base rate to 4.75%.
Markets now predict it could now peak at 6%.
This has pushed up lenders' mortgage costs, and they're passing that on to customers hoping to buy or remortgage their homes.
If you're struggling to pay your mortgage bill and need support, there are a number of options available to you.
Contact your provider
As soon as you think you will have a problem with your monthly mortgage repayment - whether you can’t pay anything, can't pay all of your monthly payment or can’t pay it on time - get in touch with your lender straight away.
They have certain schemes in place to help you if you're struggling.
You can ask your lender about the breathing space scheme if you're finding payments unaffordable.
Under the breathing space scheme, none of your debts will earn interest and no fees will be added for 60 days.
You'll be protected from debt collectors and bailiffs.
You may also be able to apply for a payment holiday - this is when you don't need to pay anything.
But interest and charges may continue to be added, and missed payments will need to be made up in the future.
Every company has a different policy so you'll need to get in touch to find out what support is available to you.
Cost of living cash
A range of cost-of-living support is available. People can visit the for more information.
Millions are also in line to receive cost of living payments worth up to £1,350.
The first instalment of the £900 payment has been paid to millions on certain benefits, including Universal Credit and Pension Credit.
Meanwhile, a £150 payment and between £150-£300 payment will be made to millions with disabilities and pensioners from June 20.
Welfare Assistance schemes
Many local councils have Welfare Assistance schemes to help struggling families.
Help available varies, but you could get free cash, food vouchers, and help for bills like rent and energy.
Check with your council to see whether you are eligible and what you can claim.
Household Support Fund
This is another scheme you can access through your local council.
It's designed to help those in most need with payments towards the rising cost of food, energy, and water bills.
Check with your council directly to see what's on offer as some share money with charities which can then give you cash or food vouchers.
Some councils restrict how often you can apply for money through this scheme to once a year, so double-check.
Check your benefits entitlement
Even though the government is stopping much of the cost of living help currently on offer, some people will still be able to get financial support.
If you claim pension credit, income support or universal credit you may be entitled to further cost of living payments.
Depending on other tax credits or benefits you already get, you could get either three or five further payments.
You can find free-to-use online benefits calculators to work out what you're entitled to.
Entitledto's free works out whether you qualify for various benefits, tax credits and Universal Credit.
Debt charity also has a benefits checker which is free to use and won't record your results.
Make sure you have key financial information to hand, such as bank and savings statements, and information on pensions and existing benefits.
If you live with a partner or family, get their basic financial information together too as this could affect your claim.
Support for mortgage interest
Support for mortgage interest or SMI helps those on Universal Credit - and other benefits - by giving them a low-interest loan.
The help goes towards mortgage payments or towards loans taken out to help repair any damage to the home.
SMI is a loan that you will need to repay with interest when you sell your home.
You'll get help paying the interest on up to £200,000 of your loan or mortgage.
But you'll only get up to £100,000 if you're getting Pension Credit.
The interest added to the loan can go up or down, but the rate will not change more than twice a year - the current rate is 3.03%.
Contact the office that pays your benefit to find out if you could get an SMI loan.
Free and confidential debt advice
There are several charities and services that offer free help and advice if you're worried about money.
It's always best to contact one of these services before thinking about debt consolidation or using a debt adviser who will likely charge you.
Citizens Advice is a free and impartial service which will help you come up with a plan to get on top of your debt including which payments to prioritise and how to reduce your living costs.
The organisation's website has a on many aspects of debt, but you can contact them directly by phone, online or in person for more personalised help.
StepChange is another free advice service offering support and guidance online or over the phone, and it's completely confidential.
You'll need to provide details of your debts, income and household spending to get a clear picture of where your money goes.
Where possible, their advisers will help you come up with a plan to repay all your debts but in a way that you can afford.
National Debtline is a charity run offering free and confidential advice to people in England, Wales and Scotland.
Read More on The Sun
You can or over the phone on 0808 808 4000, between 9am and 8pm Monday to Friday, and 9.30am to 1pm on Saturdays.
An adviser will help you work out what you can afford to repay, and help you decide on the best solution for your debt.