Many Scots are experiencing a double hit to their finances, through higher mortgage costs as well as having to fork out more in Income Tax than people living south of the border.

The BBC says today that major mortgage lenders are increasing the cost of home loans, with the average two-year fix now close to 6%.

A typical two-year deal is currently 5.75% - up from 4.74% on Friday, September 23, the day of the mini-Budget - financial information service Moneyfacts said.

Lenders have been scrambling to reprice deals after the pound's fall fuelled forecasts of a higher interest rate.

Mortgage rates have climbed as the interest rate has risen. In December, the typical two-year fix was just 2.34%.

Homeowners who have high debt levels, or who may have missed repayments on credit, may find their choice is much more limited in the short-term.

Ultra-low rates gone

Brokers say there is still money available for mortgage providers to lend, but the days of ultra-low rates - typical of the last decade - have quickly disappeared.

"We did not expect that to happen quite so rapidly," one broker said.

Mortgage rates have been rising ever since the Bank of England began a series of seven consecutive rises in the interest rate.

Lenders look at the long-term cost of borrowing, and potential demand, and try to stay a step ahead of the Bank of England when setting the rates for fixed-rate deals.

Roughly 100,000 people a month come to the end of a fix.

A homeowner borrowing £200,000 on a 30-year mortgage may have been looking at a rate of 3.5% and a monthly repayment of £898 just over a week ago. Now, there are more likely to be facing a 5.5% rate and a monthly repayment of £1,135.

Big fall in deals

Moneyfacts said that there were 3,961 deals available on the morning of the mini-Budget, compared with 2,262 at the start of this week - a 43% fall.

Meanwhile, taxpayers in Scotland will have to pay £1.2billion more Income Tax than their counterparts in England under the current fiscal plans.

The Times reports today that Holyrood's independent information centre said that, if SNP ministers keep the current income tax policy north of the border, those earning £25,000 will pay around £100 a year more in Scotland than they would south of the border, rising to almost £2,000 extra for those earning £50,000.

For those earning more than £50,000, the differential continues to widen - reaching a gap of more than £4,000 for those earning £250,000.

FTSE 100

The UK’s top share index, the FTSE 100, was up 41 points at 6,950 shortly after opening this morning, following yesterday’s 14-point gain.

Brent crude futures were 0.74% higher at $89.52 a barrel.

Oil prices jumped nearly $4 a barrel on Monday as OPEC+ considered reducing output by more than 1million barrels per day to buttress prices with what would be its biggest cut since the start of the Covid-19 pandemic.

Companies reporting today

Trading update: Greggs


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