Home Property Finance & InvestmentMortgages Over 3 million household mortgages set soar and a base rate cut ‘is not going to end the misery’

Over 3 million household mortgages set soar and a base rate cut ‘is not going to end the misery’

27th Jun 24 1:42 pm

In its quarterly Financial Policy Summary published on Thursday the Bank of England warned that more than 3 million households are set to see their mortgage payments go up in the next two years.

The Bank of England warned “many mortgagors” are coming to “the end of fixed-rate deals will see increased borrowing costs” as they have yet to refinance onto higher rates.

The added, “While most fixed-rate mortgages have repriced since mortgage rates started to rise in 2021 H2, the full impact of higher interest rates has not yet passed through to all mortgagors.

“Over three million, or 35%, of mortgage accounts are still paying rates of less than 3%; the majority of whom will have their fixed rate expire before end-2026.

“For the typical owner-occupier mortgagor rolling off a fixed rate between June 2024 and end-2026, their monthly mortgage repayments are projected to increase by around £180, or around 28%.

“Within that average, a relatively small proportion are likely to experience some very large increases – around 400,000 households will see an increase in their payment of 50% or more.”

Craig Fish, director at Lodestone Mortgages & Protection said “It’s astonishing that the Bank of England are happy to produce reports telling of the misery that millions of homeowners are yet to face, when they have the tools at their disposal to lessen this misery considerably before it becomes a reality.

“The way that interest rates are set and those that set them needs to change. These people can no longer be trusted with such power and responsibility.”

Riz Malik, director at R3 Mortgages warned, “Even a base rate cut in August is not going to end the misery for many households across the country.

“If anything, it is likely to become tougher before things improve as the Mortgage Charter has propped up the market.

“Though rates are coming down, this will not mitigate the shock many are due to experience.”

Andrew Montlake, managing director at Coreco said, “Borrowers know what’s coming and many on lower mortgage rates are getting their ducks in a row now to prepare for the bigger monthly outgoings.

“But the reality is many households are going to find themselves in an extremely difficult position when their current fixed rate ends.

“Borrowers who are concerned should be speaking to a professional mortgage adviser as early as possible as there are ways to help mitigate these rises.

“There’s something awkward about the Bank of England identifying a problem that it has the power to resolve.”

Emma Jones, managing director at whenthebankssayno.co.uk said, “The stark reality is that a lot of people have yet to come off ultra-low rates onto the higher rates available today.

“When they do, there is going to be a lot of payment shock. Even though this week has seen major lenders reduce rates across the board, they are still far higher than what many people are paying now. The irony is that the Bank of England has the power to help the very people it is talking about.”

Leave a Comment

You may also like