Bond sell-off raises UK debt interest and mortgage costs
A global bond sell-off is pushing up UK gilt yields and debt interest costs, while mortgage rates rise and millions face higher repayments.
The Full Story
A plain summary built from the channels that reported this story.
Bond market pressure
UK government borrowing costs are under renewed pressure after a global bond sell-off pushed long-term yields to multi-year highs. The 30-year gilt yield has been reported at its highest level since the late 1990s. The 10-year rate has traded at about 5.4%, while the two-year rate is around 5.5%, compared with 4.5% during the mini-budget. The Prime Minister, Andy Burnham, has previously said the government should not be in hock to the bond markets, but later said the country had left itself overexposed.
Recent borrowing figures were worse than expected. Annual interest payments on national debt are now put at between £110bn and £120bn, more than the defence budget or the education budget. The national debt is reported to be rising more quickly than in almost any other country. The government is preparing for a Budget on 28 October amid talk of a £10bn black hole, inflation at 3.1%, and sluggish growth.
Mortgage costs
Households are feeling the effects through mortgage costs. The average five-year fixed mortgage rate is now 5.94%, according to Moneyfacts, about £150 a month more than in February. UK Finance says 2.3 million households will come off fixed-rate deals next year and could face much bigger increases. Oil prices at $105 a barrel and stronger than expected US growth have added to inflation fears. US long-term borrowing costs have hit their highest level since 2004, or for 22 years.
Budget choices
Politically, the pressure is focused on the Budget. Ministers say fiscal discipline and fiscal rules matter, and point to the strongest G7 growth in the first half of the year and a more stable footing for public finances. But financial markets want evidence that the government can make difficult choices, either tax rises or spending cuts. The opposition has called for any tax rises to be ruled out. The Chancellor, John Healey, met union bosses as Budget preparations began.
Critics have highlighted welfare spending. They say PIP benefits are set to double by 2030, up £19bn, and that scrapping the two-child benefit cap could give families with eight or more children about £21,000 more, taking total benefits to £29,000. Ministers say they want to tackle child poverty while keeping an upper limit on benefits and getting more young people into work. The government also faces pressure to increase defence spending, with questions over meeting a 3% of GDP target by 2030 or a later path to 3.5%.
Business figures including Sir Jim Ratcliffe have warned that high taxes are driving wealth creators away. A Treasury minister said Ratcliffe, who is a tax exile, had a patriotism problem. The government says growth is the answer, pointing to housing and domestic defence manufacturing as areas that could deliver quick benefits. The Prime Minister is preparing for a first Budget that will test his premiership, balancing hopeful messaging with difficult economic choices.
On screen
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Key Claims
Claims reported during this story's coverage, mapped by channel. Ordered by how many channels carried each claim.
| Claim | BBC One | Channel 4 | GB News | ITV |
|---|---|---|---|---|
| Long-term borrowing costs in the US reached their highest level since 2004. | · | |||
| Borrowing costs rose, with UK yields at multi-decade highs and US long-term borrowing costs at their highest since 2004 amid a global bond sell-off. | · | · | ||
| Mortgage holders face sharp increases, with the average five-year fixed rate at 5.94% and millions re-mortgaging or coming off fixed rates this year and next. | · | · | ||
| Mortgage payments have increased by around £150 per month since February. | · | · | ||
| 1.8 million customers are remortgaging this year and many face sharp rises in the cost of living and borrowing. | · | · | · | |
| A £10 billion black hole in the public finances was reported. | · | · | · | |
| A proposed welfare bill cut of around £5bn encountered backbench opposition. | · | · | · | |
| About 8 million people pay higher-rate income tax, while the top 10% of earners account for nearly 60% of all income tax. | · | · | · | |
| Ahead of the Budget, the government faces pressure from rising borrowing costs and sluggish growth, with financial markets expecting difficult choices such as tax rises or spending cuts. | · | · | · | |
| Annual interest payments on the national debt are reported to be about £110bn to £120bn. | · | · | · | |
| Families with eight or more children could receive £21,000 more, taking total benefits to £29,000, after the two-child benefit cap is scrapped. | · | · | · | |
| Financial markets were seeking evidence of difficult choices, either tax rises or spending cuts. | · | · | · |
Channel Perspectives
What each channel focused on, with key quotes.
Focused on the political challenge for the Prime Minister and Chancellor ahead of the Budget, with rising borrowing costs as one of several dark clouds. Used mortgage remortgaging and cost of living pressures to frame the scale of the test, and highlighted market demands for tax rises or spending cuts. Did not give detailed bond yield figures.
- “With his first budget just weeks away dark clouds are gathering.”
- “We're seeing rising government borrowing costs. There's this cost of living crisis coming down the track as well”
- “either some pretty difficult tax rises or much more likely evidence that the government is prepared to make big, unpopular spending cuts.”
Interviewed Labour chair Bridget Phillipson about the wider economic picture, Budget choices, growth and tax burdens. Bond market pressure was mostly implicit in talk of international headwinds, fiscal rules and inflation. The tone was political defence of the government record rather than market analysis.
- “This week we've seen more warnings about the economic picture, inflation went up.”
- “the government looks like a traditional tax and spend socialist government with better TikTok”
- “fiscal discipline matters, and our fiscal rules matter”
Took a strongly political and critical line, tying high bond yields and inflation to Budget choices, welfare spending and alleged stealth taxes. Focused on the £10bn black hole, the 30-year yield and gilt yields being higher than under Liz Truss. Pressed the interviewee on benefits, tax exiles and defence spending.
- “there's much talk about this £10 billion black hole in the finances”
- “the 30-year yield being at an all-time high, or at least as high as it had been since the late 90s”
- “The economy cannot be stabilised when guilt yields are higher now than they were under Liz Truss.”
Gave the most detailed explanation of bond markets of any channel, presenting yields as a direct household issue through mortgages and refinancing. Argued there is no growth plan or spending commitment, and cited national debt interest costs exceeding defence and education budgets. Combined market analysis with criticism of the government's fiscal and welfare record.
- “I know you're not talking about the bond markets round the dinner table tonight, and maybe you don't think it's very important. Let me promise you, it is.”
- “Our annual repayments, the interest that we're paying on our national debt is now 110, perhaps even 120 billion pounds a year.”
- “So it matters because as people sell bonds, the interest rates go up.”
Placed the UK story in a global bond sell-off and trade context, linking US long-term borrowing costs to inflation fears. Focused on the direct household impact through mortgage rates and the number of households due to remortgage. Also covered EU-China trade tensions and other unrelated news.
- “major worldwide bond sell-off. US long-term borrowing costs hit their highest level since 2004 earlier”
- “2.3 million households are coming off fixed rate mortgages next year, according to UK finance, and they could be facing much bigger increases.”
- “Now, Moneyfacts, who do these figures, reckon that that's an extra 150 pounds a month, pretty much, in mortgage payments since February.”
Who was on air
People and organisations each channel put on air while covering this story. Channels' own presenters and reporters are not listed. Names as transcribed, and the list can miss people.
- 19:48 BST
professor edward fishman, professor, worked in the pentagon the state department and the u.s treasury
“according to professor edward fishman who's worked in the pentagon”
Channel 4 News · Thu 24 Sept
Broadcast Timeline
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