S&P Global said consumers were concerned about the likelihood of an increase in interest rates by the Bank of England. More than 50% of 1,500 respondents said they expected a rise in the cost of borrowing over the next year.<\/p>\n
Fixed-rate mortgage costs have already jumped to multi-year highs in the UK, while the threat of artificial intelligence and caution among employers about hiring new staff sent consumer confidence in the jobs market plunging to its lowest level in three-and-a-half years.<\/p>\n
The average two-year fixed residential mortgage rate rose to 5.88% on Monday, its highest since 16 April and up from 5.84% last Friday, while the average five-year is at its highest since October 2023, at 5.92%, up from 5.88%, data from Moneyfacts showed.<\/p>\n
The rise in mortgage costs is expected to add about \u00a3150 to monthly mortgage payments, based on a typical loan of \u00a3250,000 over 25 years, since the start of March 2026.<\/p>\n
Official figures have shown that the average direct debit to cover monthly mortgage costs has risen over the past four years from about \u00a3600 to \u00a3900.<\/p>\n
Maryam Baluch, an economist at S&P Global Market Intelligence, said a downbeat mood was spreading across UK households \u201cas improved sentiment surrounding the new government is eroded by renewed worries over energy prices, the cost of living and job prospects\u201d.<\/p>\n
She said: \u201cAgainst a backdrop of rising volatility in energy markets linked to tensions in the Middle East, households increasingly reported difficulties accessing credit, suggesting that expectations of tighter monetary conditions are beginning to feed through to borrowing conditions. Together, these factors point to cautiousness about both financial prospects and pose some downside risks to the broader economic outlook.\u201d<\/p>\n
Analysts believe the jobs market has proved resilient since the US attack on Iran and a steep rise in the cost of fuel and energy, but a steady decline in the number of payrolled employees over the past six months and a drop in vacancies to a five-year low have shown employers are worried about their profitability over the next year.<\/p>\n
The British Chamber of Commerce has called for the government to give businesses extra support after a series of tax rises over the past two years, including an increase in employers national insurance payments.<\/p>\n
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