Just under half of mortgage holders will see their bills rise because they’ll be coming off loans
Four million households face a mortgage bill shock after Christmas and in the New Year. Just under half of mortgage holders will see their bills rise because they’ll be coming off loans they took out when interest rates were at rock bottom.
4.5million fixed-rate mortgages are coming to an end over the next two years, the Bank of England said. On average they will see their monthly mortgage repayments go up by £64 – or a total of £768 a year.
However it warned some homeowners will face “much larger increases”. In its regular Financial Stability Report, the Bank of England said: “Borrowing costs have decreased following recent reductions in Bank Rate.
READ MORE Drivers planning to resort to drastic lengths to escape new 3p-per-mile car tax
“But there are still some households that are expected to face higher mortgage payments over the next three years.”
Back in July, the average borrower coming off a fixed rate deal over the next two years faced a projected £107 increase.
The figures illustrate that if – as expected – interest rates are cut again to 3.75 per cent later this month, not all borrowers will benefit from the pre-Christmas gift.
In total over the next three years, 43 per cent of mortgage accounts, or 3.9million, will refinance onto higher rates, according to the report.
The number includes both fixed and variable rate mortgages.The Bank of England started raising interest rates in December 2021 when they were close to zero and they eventually hit 5.25 per cent in the summer of 2023.
It started cutting them the following year and since then they have come down to 4 per cent.
But it is warned anyone with a fixed mortgage deal agreed during a period of lower rates still faces a shock when it expires.
A third of borrowers, or three million households, will see payments decrease in the next three years, but others will face a hike.
