Homeowners in UK and beyond hit as global bond selloff drives up mortgage costs
LONDON: For five years, the interest rate on Richard Merrett’s mortgage was locked at 1.14 per cent, but with that ultra-cheap deal due to expire in early 2027 he faces a sudden trebling of his monthly housing costs from £550 (US$728) a month to £1,650.
Richard Merrett, managing director at mortgage firm Alexander Hall, is experiencing a dramatic increase in his mortgage payments. His interest rate was previously locked at 1.14 percent, but it's set to triple from £550 to £1,650 per month by early 2027. This steep rise is attributed to a global bond market selloff, driven by surging energy prices due to the Iran war.
Nicholas Mendes, mortgage manager at broker John Charcol, explains that the 30-year government bond yield has hit 6.0 percent for the first time since 1998, leading to a trebling of mortgage rates. This price hike comes as a shock to Merrett, despite his experience in the lending market, and could result in significant belt-tightening for affected homeowners.
The rise in Britain's 30-year government bond yield has also raised concerns about its potential impact on the wider economy and other countries, including the US and euro zone.
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