Homeowners in UK and beyond hit as global bond selloff drives up mortgage costs
TLT•A global bond selloff is pushing mortgage costs higher in the UK and elsewhere. The US 30-year fixed mortgage rate reached 7.28%, while nearly 750,000 UK borrowers whose fixed-rate mortgages expire this year face an average £170 monthly increase, the Bank of England estimated.
1. UK borrowers face increases
A rise in UK government bond yields is adding pressure to mortgage costs as banks pass on higher funding expenses. The 30-year government bond yield topped 6% on Thursday for the first time since 1998, while the two-year Sonia swap rate rose 27 basis points in a month to 4.68%, mortgage manager Nicholas Mendes said. The Bank of England estimated that more than 5 million households could see repayments rise by the end of 2028.
2. Rates rise worldwide
The US rate on a 30-year fixed mortgage reached 7.28% this week, up from 7.03% the previous week and more than 100 basis points since the Iran war began. In the euro area, loans with an initial fixed-rate period of at least 10 years rose to 3.43% in August. UK mortgage approvals fell to their lowest level since the end of 2023, and house-price growth was the weakest since December 2025, Nationwide Building Society said.
