Global bond sell-off pushes borrowing costs higher
Rising government bond yields are feeding through to mortgages and other loans as investors worry about debt, deficits and inflation.
Borrowing costs are climbing in markets around the world as a sell-off in government bonds drives yields to levels not seen in decades. The move is expected to affect mortgages, business lending and other forms of credit.
In the UK, lenders are facing higher swap rates, which they use to set mortgage pricing, after this week’s turbulence in bond markets. Those rates have reached a three-year high, according to market data cited by the Guardian.
The latest rise has been linked to concern that inflation may stay elevated, with higher oil prices adding to expectations that central banks could keep interest rates restrictive for longer. That has added pressure on households already facing expensive home loans.
The New York Times reported that the broader bond move reflects investor anxiety about government debt and budget deficits as well as inflation. The effects are likely to spread beyond housing finance into business loans and other credit markets.
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