Sunday, February 25, 2024
Finance

Nearly 5m homeowners to face even higher mortgage repayments

mortgage repayments

Nearly half of mortgage holders have moved to a new fixed-rate deal since interest rates started increasing in late 2021, amounting to over 5 million households

Around 5 million UK homeowners are still set to see their mortgage repayments climb by hundreds of pounds over the next three years, as rising interest rates have increased risks in the global financial markets, the BoE has said.

The Bank’s Financial Policy Committee (FPC) also found that British banks are strong enough to support households and businesses even if economic conditions get significantly worse.

Nearly half of mortgage holders have moved to a new fixed-rate deal since interest rates started increasing in late 2021, amounting to over 5 million households.

But a further 5 million homeowners are still due to face higher borrowing costs by the end of 2026, the Financial Policy Committee said in its latest Financial Stability Report.

BoE policymakers have hiked interest rates steadily for around two years, with rates currently sitting at 5.25 per cent.

A typical mortgage holder coming off a fixed rate between Q2 2023 and the end of 2026 is projected to face a £240 rise in their monthly repayments.

But nearly 500,000 households could experience a monthly increase of over £500 by the end of 2024.

Higher borrowing costs have resulted in arrears rising slightly, and more people could fall behind on their payments in the coming years, the Financial Policy Committee said.

However, the UK banking system is well capitalised, has high levels of liquidity, and “has the capacity to support households and businesses even if economic and financial conditions prove to be substantially worse than expected,” the report added.

But risks in the broader economy and global financial markets remain challenging, the report added.

Leave a Reply