London: According to data from data provider Moneyfacts, a significant mortgage rate in the UK surged this week to its highest level in fifteen years, surpassing the rate reached in the wake of a September "mini-budget" crisis.

Tuesday saw a sharp increase in the typical residential two-year fixed mortgage rate, which now stands at 6.66%, just barely surpassing the level of 6.65% reached in October. In August 2008, during the financial crisis, when rates were at 6.94%, mortgage costs in Britain were at their highest point.

The Bank of England raised interest rates several times in an effort to reduce inflation, which caused mortgage rates to soar and caused a decline in demand, slowing the growth of the British housing market.

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Fixed mortgage deal rates have been rising recently as a result of worries about stickier-than-expected consumer price growth, which held at 8.7% in May. This has resulted in a significant increase in the cost of funding.

In addition to straining the already troubled housing market in the nation, the rate increase is making cash-strapped homeowners fear the worst.

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Increasing mortgage rates and the broader cost-of-living crisis are both having an impact on households and customers, according to Andrew Asaam, director of homes at Lloyds Banking Group, who was quoted by Reuters.

According to a National Institute of Economic and Social Research study, 1.2 million British households, or 4% of all households nationwide, would run out of savings by the end of the year as a result of the BoE's most recent rate increase of 0.5 percentage points to 5% due to higher mortgage repayments.

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"We suspect that higher mortgage rates will contribute to weaker economic activity in early 2024, and we are now not ruling out a technical recession in the first half of next year," Matthew Ryan, head of market strategy at global financial services firm Ebury, said.

The UK interest rate peak, according to the financial markets, is expected to be around 6.35% in the first quarter of 2024, he continued.