Mortgage payments may increase by more than £1,000 a year

Mortgage payments

Sunak told cabinet ministers that interest rates are expected to rise by 2.5% in the coming months as the cost-of-living crisis deepens

Some homeowners are likely to see their mortgage payments increase by more than £1,000 ($1,254) a year if the base rate rises further, the chancellor Rishi Sunak has warned.

Sunak told cabinet ministers that interest rates are expected to rise by 2.5% in the coming months as the cost-of-living crisis deepens.

It means people without fixed rate mortgages will be adversely affected by higher repayments.

A 1% increase on a typical mortgage could lead to a £700 ($878) rise for those who do not have a fixed-rate deal.

The chancellor told Mumsnet: I’m really conscious that, I don’t want mortgage rates to have to go up any more than they’re already going up.

The chancellor warned ministers against borrowing more to fund public spending.

He added: If governments, at a time like this, borrow lots and lots more money, and we’re already borrowing quite a lot, our own interest bill is ticking up, what that does is risks interest rates having to go up even more.

That will just add to pressure for people with mortgage payments to make, he said.

In response to comments from the Chancellor, Amanda Aumonier, head of mortgage operations at online mortgage broker Trussle, said that many homeowners are quite understandably concerned about their finances.

She commented: Given the recent history of low interest rates, many have not needed to keep an eye on their mortgage deal, as there wasn’t much variability in tracker rates. However, with interest rate rises set to continue like clockwork throughout the year, timing is now key.

She said: Homeowners could find a huge difference between fixing in a long term deal now compared with the end of the year. It is important to bear in mind that you can usually remortgage six months before your current deal ends; so anyone nearing the end of their deal should start considering their options.

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