Mortgage rates coming DOWN again in huge sigh of relief to Britons - and interest rates are set to drop too

Mortgage rates are on their way back down, the governor of the Bank of England said last night.

Andrew Bailey, appearing before the Treasury Committee, blamed the mini-budget for chaos in the gilts market, resulting in a surge in mortgage rates.

The mini-budget was introduced during Liz Truss’ short tenure as Prime Minister, designed to stimulate economic growth through a series of tax cuts.

Andrew Bailey told the Treasury Committee: “I hoped that we would see mortgage rates come down, and that has happened, we have seen new fixed-rate mortgage rates have come down since.

“I’m talking there about the lower-risk end of the mortgage market, so loans with a sub-75 per cent loan-to-value, and actually the higher-risk end as well.

“We have seen correcting in that respect and, of course, that benefits people seeking mortgages.”

Mr Bailey added that the “risk premium” in the UK interest rate environment has now gone – meaning the higher rates demanded in countries where there is greater economic instability.

While mortgage debt and home repossessions are much lower now than during previous financial crises.

He said: “Overall mortgage debt service levels are lower than they were than at points in history when we had stress – before the financial crisis and in the early nineties.

“However, I do recognise that one of the big distinctions between now and some of the points in the past is that we are in a cycle of rising interest rates.”

The governor also admitted that there is “something of a hangover effect” following the turbulence of late last year.

“It is going to take some time to convince people that we are back to where we were before”, he said.

Chief Executive Office of the Prudential Regulation Authority Jonathan Hall spoke to the Committee about interest rates, claiming they have stabilised.

He said: “Not only have the interest rates stabilised, depth and liquidity has returned to the market and volatility has declined.

“So from a market perspective, we are back to where we were at the end of the summer.”