Half of Mortgage Holders Already on Higher Fixed-Rate Deals
About half of mortgage holders in the UK have already taken advantage of new fixed-rate deals as interest rates continue to rise. However, the Bank of England Financial Policy Committee (FPC) warns that another five million homeowners will still face higher borrowing costs by the end of 2026.
Bank of England Steadily Increases Base Rate
The Bank of England has steadily increased the base rate over the past two years, going from a historic low of 0.1% to the current rate of 5.25%. This increase affects mortgage rates, as high street banks and lenders use the base rate to determine interest rates on borrowing and savings, including home loans.
Projected Increase in Monthly Repayments
A typical mortgage holder coming off a fixed-rate deal between the second quarter of 2023 and the end of 2026 is projected to face a £240 increase in their monthly repayments, or nearly £2,900 a year. Additionally, around 500,000 households could see their monthly payments increase by more than £500 by the end of 2024.
Preparing for Higher Mortgage Costs
With the cost of living already putting pressure on budgets, many homeowners may find the prospect of higher mortgage payments daunting. To prepare for these increases, mortgage expert Karen Noye suggests considering options early, using budgeting tools, reviewing credit history and score, building an emergency fund, and maintaining open communication with lenders.
Contact Lender for Assistance
It is essential to contact your lender as soon as possible if you anticipate difficulty in making your monthly mortgage payments. Lenders are required to offer significant support and find solutions to help struggling borrowers. Seeking help and demonstrating proactive efforts to repay debt can help avoid repossession orders in the future.
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