Mortgage peaks bring depression for home owners

FRUSTRATING is probably the mildest word to describe the minefield that securing a new mortgage has become over the last weeks or so.

Just as in the wake of the mini-Budget last September, hundreds of products have been pulled from the market, reducing choice, and rates are rising inexorably.

Today the average two-year deal cost 5.45%, up by seven basis points on yesterday and now at the highest level seen since late January.

We are not yet quite at Truss levels of pain, but the direction of travel is clear. Rates will continue to head north and stay there up to the point when the bond markets are convinced that the Bank of England has inflation tamed.

The result will inevitably be more downward pressure on prices and transactions, which are already subdued, if latest data from HMRC is anything to go by. Residential sales were 29% down in April compared with March.

Last year the gilt and mortgage markets pulled out of their tailspin when the rapid appointments of Jeremy Hunt and Rishi Sunak convinced investors that grown up politicians were back in charge. But clearly the “dullness dividend” card can only be played once.

There is not another PM and Chancellor team even more sober and sensible than the current incumbents ready to move into Downing Street.

No, as Hunt bleakly acknowledged last week, it will be a long hard slog that could mean recession by the end of the year. For first-time buyers and homeowners needing to remortgage, these are tough times.

All that can be done is to batten down the hatches and wait for the storm to pass. But this time, rather than the hurricane that blew through last autumn, it threatens to be a slow-moving depression with few signs of the skies clearing this side of Christmas.