According to financial data firm Moneyfacts, the average two-year fixed rate on a £200,000 mortgage over a 25-year term is now 5.64%. That compares with 5.34% before the latest inflation data.
Moneyfacts said the interest charge has hiked by 0.3 percent, with recent data showing that inflation has not come down as quickly as expected. Inflation is the rate at which prices for goods and services rise. The higher the level of inflation, the less your money travels.Experts predicted the Bank of England will raise rates higher than previously thought, from their current 4.5% to as high as 5.5%. Consequently, many lenders have raised mortgage rates and removed deals.
The Bank of England has raised interest rates 12 times in a row, so it has been steadily increasing over the last 18 months. The interest rate is reviewed every six weeks. A nine-person committee, the Monetary Policy Committee, determines the Bank of England base rate. The next decision on the interest rate will be announced this month, on Thursday June 22.
Meanwhile, higher food prices have been partly blamed on Russia's war with Ukraine as well as poor harvests in some European countries, indirectly increasing the cost of living in the UK.