Half of mortgage debtors will see funds rise over the following three years
Half of Britain’s mortgage borrowers will see their repayments go up over the next three years, the Bank of England warned yesterday.
The Bank said 4.4million households would have to switch to higher-rate deals between December this year and the fourth quarter of 2027.
Among them are 1.5million whose mortgage costs will go up for the second time since the Bank started raising rates in 2021.
The reason for the delayed impact is that some borrowers will have taken out cheap fixed-rate deals, for example on a five-year term, before the Bank started those hikes.
Of the 4.4million, 2.7million will see their mortgage rates top 3 per cent for the first time, and 420,000 will suffer an increase of more than £500 a month.
However, 2.4million borrowers will see their mortgages go down over the next three years, according to the Bank’s twice-yearly Financial Stability Report. This is because those who took out deals after the hikes will start to benefit from recent interest rate cuts.
The figure includes 1.7million who are on variable rates – who benefit immediately from the Bank’s rate cut – as well as 700,000 on high-rate fixed deals who will be able to find a cheaper product.
It comes as separate figures showed mortgage approvals by lenders rose last month to 68,303, the highest level since August 2022.
The Bank of England has warned that over half of mortgage borrowers will see their repayments rise over the next three years (file photo)
Among households affected are 1.5million whose mortgage costs will go up for the second time since the Bank started raising rates in 2021 (file photo)
Most lenders offer a rate that depends on the expected path of Bank rate over coming years.
That path has slowed as a result of Labour’s recent Budget, a spending and borrowing spree that the Bank has warned will add to inflation pressures. While the Bank’s report also pointed to the global factors that will have an impact.
It warned that rising global debt levels and a possible trade war sparked by Donald Trump’s tariff plans could take a toll.
The Bank said surging public debt across the world could result in market jitters that could ultimately result in higher borrowing costs for households and firms in the UK.
The report also pointed to conflict in the Middle East, war in Ukraine and deteriorating relations between the US and China as factors that could harm UK financial stability.
