Interest rates are at a 16-year-high of 5.25 per cent, with no cut possible until at least August and possibly beyond
Around 3 million UK households are to be hit with further hikes in mortgage repayments over the next two years, the Bank of England is warning.
Its latest Financial Stability Report says “very large increases” of more than 50 per cent will apply to the mortgages of nearly 400,000 households.
Currently nearly 35 per cent (or three million) of households with mortgages pay with interest rates below 3 per cent and will see a rise between now and the end of 2026.
A typical household rolling off a fixed-rate mortgage in the next 30 months will face a jump of around £180 a month, according to the Bank of England.
The report accepts that most households have already had a rise in their mortgage rates since borrowing costs began increasing substantially in 2022. Interest rates are at a 16-year-high of 5.25 per cent, with no cut possible until at least August and possibly beyond.
The BoE highlights that a growing proportion of households borrow over a longer period of time to minimise monthly repayments but with more debt to service over time.
The Bank of England is particularly aware of burdens for renters, with the proportion of those behind on rent up to 16.5 per cent in the first quarter of this year, compared with 15.7 per cent a year ago.
Nevertheless, overall the BoE insists the overall risk environment for the economy and financial sector is unchanged with the banking sector having the capacity to support households and businesses even if economic and financial conditions were to be substantially worse than expected.