Mortgage warning as Britons set to pay extra £378 due to Bank of England hikes | Personal Finance | Finance
The base interest rate has continually increased over the past year, with the rate currently at three percent. The rate is predicted to continue to rise in the new year, piling pressure on mortgage repayments.
Analysts at TotallyMoney and Moneycomms have calculated how the latest rates hike could impact the 2.2 million homeowners without a fixed rate mortgage.
For the average UK home worth £270,708 with a 75 percent LTV, a 0.5 percent would mean monthly repayments rising by £52.
This increase would mean mortgage holders are paying out an extra £378 each month compared to last year.
Some four million homeowners will see their monthly payments increase over the next year, according to the Bank of England.
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Alastair Douglas, CEO of TotallyMoney, said: “It’s essential you contact your lender if you’re finding it difficult to keep up with mortgage repayments.
“Just last week, the Financial Conduct Authority set out a number of ways in which they expect firms to support borrowers impacted by the soaring cost of living.
“These measures include allowing customers to make lower repayments, switch to interest-only, or moving to a different rate on their mortgage. So there is help if you need it.
“Missed payments can stay on your credit report for six years, acting as a red flag to lenders when it comes to remortgaging or simply applying for another form of credit.
This represents an interest rate increase of 2.5 percent since 2022, according to the team at Invezz.
Pete Mugleston, managing director at www.onlinemortgageadvisor.co.uk, urged people concerned about the payment hikes to contact their lenders.
He said: “For now, our advice remains unchanged. Homeowners should seek help from their lender immediately if they’re struggling to keep up with their mortgage repayments and for anyone looking to buy a property or remortgage, we urge them to speak to an experienced mortgage advisor before making any decisions.”
In light of the growing interest rates, analysts at Hargreaves Lansdown are predicting an economic downturn of at least 12 months for the UK.
The firm said: “This is likely to lead to an increase in unemployment and is set to dent the profits of some companies will be affected, which in turn will mean the government won’t be able to collect so much in tax to pay for public services.
“But it is hoped that lower demand for goods and services should help bring down inflation.”
Struggling Britons are already facing soaring prices for everyday essentials including energy and food bills.
From the start of October, with the introduction of the Government’s Energy Price Guarantee, average household bills went up to £2,500 a year.
This cap will be in place until April next year, when average bills will go up again, to £3,000.