Rising mortgage rates are reaching a “tipping point”, beyond which switching to an interest-only deal will not soften the blow.
Henry Jordan, an executive at Nationwide, has told MPs that converting to an interest-only loan, which is one of the options that lenders are offering to customers to help them deal with rising borrowing costs, is unlikely to help households once mortgage rates reach between 6.25% and 6.5%.
According to data provider Moneyfacts, rates on two-year deals are already at 6.66% – the highest since August 2008. On Tuesday they passed the peak of 6.65% reached on October 20 after former prime minister Liz Truss’s mini-budget.
