The recent sell-off in the bond market has raised concerns about increasing borrowing costs for UK households, particularly affecting fixed-rate mortgages. Lenders are expected to raise rates in response to rising swap rates, with Coventry Building Society already announcing hikes for new and existing borrowers. Current average rates for two-year and five-year fixed mortgages are 5.59% and 5.63%, respectively.
While younger savers may benefit from lower stock prices, retirees with investments in government bonds might face challenges if they need to sell. However, higher gilt yields could lead to lower annuity prices, potentially benefiting those converting pensions into guaranteed income. The Bank of England's base rate is expected to remain stable, with potential increases anticipated later this year.