Millions of families are being told to prepare for “very large increases” to their mortgage repayments over the next two years by the Bank of England.
The central bank’s Financial Policy Committee (FPC) is sounding the alarm that three million households are likely to pay more with around 400,000 likely to see hikes of “more than 50 per cent”.
The Bank of England base rate has held interest rates at a 16-year high since it was hiked to 5.25 per cent last August GB NEWSThis is the equivalent of three million households with the average family coming off a fixed-rate mortgage before the end of 2026 likely to face a hike of around £180 a month.
Furthermore, the Bank’s report cited that an “increasing proportion” of households have opted to borrow over a longer period of time.
As result, families have seen a reduction in monthly repayments but have been pushed further into debt as a consequence.
Notably, higher interest rates on mortgages has led to many homeowners and renters being able to ringfence more of their hard-earned cash for savings.
On top of this, the Bank of England noted that the share of renters falling behind on payment jumped to 16.5 per cent in the first quarter of 2024.
In comparison, this figure was at 15.7 per cent this time last year.
LATEST DEVELOPMENTS:
The Bank of England is being urged to cut interest rates to help homeowners GETTY
The FPC report stated: “Investors in financial markets are continuing to expect the economy to recover and inflation to fall.
“They are placing less weight on risks, such as geopolitical developments or continued high inflation, that might cause weaker growth or interest rates to stay higher than expected.
“These risks make it more likely that there could be a sharp correction in asset prices that could ultimately make it more costly and difficult for UK households and businesses to borrow.”
The Bank of England’s MPC is next expected to make an announcement regarding interest rates on July 4.
