LONDON, July 11 (Reuters) - A key British mortgage rate hit a 15-year high on Tuesday when it rose above the levels reached in the aftermath of last year's "mini-budget" crisis.
The average two-year fixed residential mortgage rate hit 6.66%, narrowly exceeding the 6.65% touched on Oct. 20 and the highest since August 2008 when it stood at 6.94%.
Britain's housing market activity staged a recovery in early 2023 from the turmoil triggered by the unfunded tax-cutting plans of former Prime Minister Liz Truss. But homeowners and buyers have faced renewed mortgage pain in recent months.
Fixed mortgage deal rates have risen rapidly in recent weeks as stickier-than-expected consumer price inflation, which held at 8.7% in May, pushed up bond yields and increased market bets on the BoE's benchmark rate peaking at 6.5%, up from 5% now.
Swap rates, a key measure lenders use to determine the cost of mortgage borrowing, have also soared. Two-year swaps jumped by 0.89 percentage points over the course of June.
The surge has prompted major mortgage lenders to repeatedly reprice home loan offerings. However, most households have yet to face the impact of higher borrowing costs as they are still locked in to previous deals.
The five-year rate, which peaked last October at 6.51%, rose to 6.17% on Tuesday. (Reporting by Suban Adbulla and Sachin Ravikumar; Editing by William Schomberg and Kate Holton)
