Aurelia Butler

In a week where the entire nation has been gripped by interest rate panic, the loudest voices in the room are those of the mortgage bores. Every workplace, family and social circle has one. Been prattling on about how you signed up for a 10-year fix at a smidgen over 1 per cent long before the chaos of Kwasi Kwarteng’s “mini” Budget”? I’m afraid that person is you.Those less likely to speak up are those whose fixed-rate deal is nearing expiry as interest rates — and anxiety levels — climb higher. Mortgage bores might claim that they saw it coming, but the reality is more arbitrary. Unless you paid to end your fix early, the precise timing of when deals start and end is mostly down to luck. Nevertheless, mortgage rates beginning with a 6 or 7 are going to be a painful adjustment for hundreds of thousands of households coming to the end of their deals, potentially adding hundreds of pounds to monthly outgoings. If your agreement has a few years left to run, don’t feel too smug. You might not be making lifestyle economies to deal with payment shock now, but your friends and colleagues certainly are (even if they don’t want to talk about it). And the pain of higher repayments will hit all borrowers in time — it could well cost the Conservatives the next election. Amid the drama of this week’s great repricing — with HSBC raising rates twice in one week and other lenders looking to follow suit — the polls tell us that twice as many people blame the government for rising mortgage costs as those who blame global crises such as the war in Ukraine or the effects of the pandemic.There have been calls for Downing Street summits with mortgage lenders and even Covid furlough-style payouts to help struggling borrowers. But taming inflation by squeezing people’s finances is exactly what rate rises are designed to do. “If the policy isn’t hurting, it isn’t working,” was how then-chancellor John Major put it in 1989 as rates headed towards 15 per cent. But such rises are a blunt tool. The mortgage bores (and the mortgage free) can still consume with wild abandon; the pain is concentrated on those whose fixes have expired. The lottery of it all can be both personally and politically unpleasant.By and large, mortgage lenders acted admirably during the pandemic, offering forbearance to distressed borrowers. Regulators have been clear this support must continue. Yet even if rates drop back in coming years, we will not see the return of mortgage rates starting with a 1 or a 2. Those refinancing home loans face a further dilemma. Should they risk a tracker rate or short-term fix in the hope of locking into a lower rate in future? People feel painfully ill-equipped to deal with a decision that could make or break the family finances for years to come — it’s a particular problem for millennial couples saddled with bigger mortgages and childcare costs. Advice only goes so far. Brokers can find you the best deals on the market but they can’t tell you which option to pick. A five-year fix at current levels means borrowers could be stuck making higher repayments for longer than they need to, but many crave certainty — and protection from further increases.In the UK, the value of our homes is firmly shackled to our sense of self-worth. The current situation is politically toxic for the Tories, long regarded as the party of home ownership. From Right to Buy in the Thatcher era to Help to Buy in recent years, owning your own home has symbolised success; a one-way ticket to financial prosperity — even if you borrowed heavily to get on the ladder. Since the financial crisis, average pay growth has been puny in real terms but average house prices have soared, making property owners feel considerably richer. Seeing a neighbouring property advertised for a handsome sum on Rightmove is the equivalent of financial Viagra, helping alleviate the pain of expensive mortgages. But as more fixes expire over the next 18 months, the impact of higher rates will inevitably cause house prices to fall. This is terrible timing for a government heading into a general election. But however worried borrowers might be feeling, anxiety among those renting privately is even higher. In April, letting agent Foxtons said it had 97,000 tenants chasing after just 2,000 available rental properties. Annual rent increases have hit record highs, making it even harder for the 5.5mn UK households renting to ever achieve the dream of property ownership. So while higher mortgage payments will smart as the era of cheap money comes to a close, homeowners still have reasons to count their blessings.Claer Barrett, the FT’s consumer editor, is the author of ‘What They Don’t Teach You About Money’. [email protected] More

The Central American country’s economy expanded by 4% last year, according to official data, and the government has forecast gross domestic product growth of between 3.5% and 4.0% this year.The slowdown is mostly pinned on losses caused by the drought currently affecting agricultural and energy production, the IMF noted, adding that the dry streak could be more severe and protracted than previously expected.Honduran authorities said earlier this week they would begin rationing electricity due to the drought’s impact on the country’s hydroelectric plants.A drought linked to El Nino weather phenomenon is affecting much of Central America and is expected to cut into the region’s harvests.”Honduras remains one of the world’s most vulnerable countries to climate disasters, with sizeable adaptation investment needs,” the IMF statement said. More

The loan will support the Central American country’s post-pandemic efforts to grow employment and wages and assist small and medium-sized companies.”While Costa Rica has made much progress in the environmental, economic, and social spheres, the reduction of poverty and inequality remains an ongoing challenge,” Carine Clert, World Bank country manager for El Salvador and Costa Rica, said in a statement announcing the new financing package.The 19.5 year loan includes a four-year grace period, with an interest rate based on the Secured Overnight Financing Rate (SOFR) plus a variable margin in U.S. dollars, the statement added. More

At one point, nearly 20,000 users in total said they were having trouble accessing Facebook and Instagram and Meta’s messaging service WhatsApp, according to outage-tracking website Downdetector.com.Outage reports had come down to less than 500 as of 6:30 p.m. ET (2230 GMT), according to Downdetector.Downdetector tracks outages by collating status reports from several sources including user-submitted errors on its platform. The outage may be affecting a larger number of users.Issues with Meta’s Ads Manager, the advertising tool that lets brands buy and create Facebook ads, were also resolved, the company said. More

UK households that come to the end of fixed-rate mortgage deals next year face an average £2,900 increase in annual payments, putting Rishi Sunak under pressure to defuse an election-year time bomb.The estimated increase in payments by the Resolution Foundation think-tank reflects concern that the UK has a worse inflation problem than other countries and that the Bank of England will need to raise interest rates to almost 6 per cent next year, when a general election is expected. Liberal Democrat leader Sir Ed Davey on Friday called for a targeted £3bn “mortgage protection fund” for people whose homes would otherwise be repossessed, in a sign of growing political heat on the issue.But the prime minister and his chancellor Jeremy Hunt argue that such a move would be dangerous because it would fuel inflation.Sunak said on Wednesday that the government’s “number one economic priority” was taming high inflation.The political row comes after another week of mortgage rate increases by lenders, including NatWest, Nationwide and HSBC, in moves that followed poor official inflation data last month that prompted financial markets to increase their expectations of interest rate rises by the BoE.“It is serious,” said one senior government figure. “That’s why we are fully focused on halving inflation by the end of the year. Inflation is the disease in the economy.”The BoE is likely to raise interest rates from 4.5 per cent to 4.75 per cent when the Monetary Policy Committee meets on Thursday, although some economists think a larger increase is possible if there is another bad set of inflation figures on Wednesday. BoE governor Andrew Bailey said on Tuesday that inflation was “taking a lot longer” than hoped to come down, and a central bank survey found that public confidence in its ability to control inflation had fallen to its lowest level since records began.In a report, the Resolution Foundation estimated that 1.6mn fixed-rate mortgages are due to expire in 2024.Simon Pittaway, author of the think-tank’s report, said households remortgaging in 2024 faced the largest increase in annual payments, because it was likely to be the year of peak interest rates, and most borrowers would have previously enjoyed cheap deals. Although the average annual increase in payments next year is estimated to be £2,900, younger families with larger debts could experience significantly greater rises.The Resolution Foundation estimated that the average rate on a two-year fixed mortgage will increase to 6.25 per cent this year, and will not fall under 4.5 per cent until the end of 2027.“The latest moves in market interest rates suggest that a dire outlook for UK mortgagors just got worse,” Pittaway said.“If rates move in line with expectations, UK families are set to face a prolonged and historic mortgage crunch.”Once almost all mortgage borrowers move on to more expensive mortgage products, the Resolution Foundation estimated that they would collectively be paying £15.8bn more each year to service their debts than in 2021, when the BoE started to raise interest rates in response to inflation. Labour has claimed that homeowners are paying a “Tory mortgage premium”. Liam Byrne, former Labour Treasury minister, said: “The single most decisive piece of literature that comes through a voter’s letterbox between now and the election will be their mortgage statement.” More