Three million households will see an increase between now and the end of 2026, with nearly 400,000 homeowners seeing a rise of over 50% in their payments, the BoE said
Millions of households across Britain will see huge hikes in mortgage repayments over the next two years, according to a report by the Bank of England.
Three million households will see an increase between now and the end of 2026, with nearly 400,000 homeowners seeing a rise of over 50% in their payments, the BoE said.
A typical household rolling off a fixed-rate mortgage before the end of 2026 will also face a jump of nearly £180 a month.
Interest rates are at a 16-year-high of 5.25%, with the central bank voting to maintain the figure for a seventh successive meeting earlier this month.
The central bank highlighted that an “increasing proportion” of households have been choosing to borrow over a longer period of time, reducing monthly repayments but leaving them with more debt to service over time.
It said that the share of renters falling behind on payments rose to 16.5% in the first quarter of 2024, compared with 15.7% a year ago, after significant increases in rents year-on-year.
Survey data also found that “many renters and low-income households intend to run down their savings even further” in the next year to deal with the higher cost of living.
The central bank stressed that, despite pressure on household finances, the overall risk environment for the economy and financial sector is widely unchanged.
The banking sector “has the capacity to support households and businesses even if economic and financial conditions were to be substantially worse than expected”, as per the bank.
But there are “global vulnerabilities” for the sector, including “policy uncertainty” associated with upcoming elections across the world, including in the UK, the US and France in the coming months.
Financial markets also face the risk of a “sharp correction” to asset prices, which have increased significantly in recent years. BoE also highlighted that high inflation or geopolitical changes could spark a sell-off which could impact prices.
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