Mortgage payments in the UK could become more expensive for many households.
London With mortgage rates rising in the UK, a London think tank is warning of high costs for consumers. Annual mortgage repayments for the average household refinancing would increase by £2,900, the Resolution Foundation said on Saturday. The increase will affect around 7.5 million households by 2026.
The British “mortgage crisis” triggered by the chaotic fiscal policies of short-term Prime Minister Liz Truss continues to worsen, the think tank stressed. This is also due to the fact that the Bank of England will continue to raise the key interest rate due to the unexpectedly high inflation – according to the think tank’s expectations from the current 4.5 percent to 6 percent by mid-2024. “These higher expectations are quickly affecting mortgage rates, with offers being pulled from the market and replaced by new ones with higher interest rates,” the Resolution Foundation pointed out. This could add £15.8 billion to total annual mortgage payments by 2026.
As of Friday, the average two-year fixed-rate mortgage for homeowners was 5.98 percent. The think tank predicted that it would not fall below 4.5 percent before the end of 2027. This would significantly amplify the magnitude of the current mortgage crisis.
The number of homeowners who have to service a mortgage in the UK has fallen from 40 per cent to 30 per cent since 1989. This is also because older people have paid off their mortgages and fewer younger people are buying their own homes.
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