UK Homeowners Face Increased Mortgage Costs
Bank of England forecasts indicate one million more homeowners will experience higher mortgage bills by the end of 2028.
The Bank of England anticipates that one million more UK homeowners will face increased mortgage payments by the end of 2028 than previously projected. This upward revision in forecasts is attributed to the economic impact of ongoing geopolitical events.
According to the Bank's Financial Stability Report, just over five million homeowners are expected to see their monthly mortgage repayments rise by the end of 2028. This figure represents an increase from the four million projected in December.
Despite the rise, the report suggests the financial strain will not be as severe as experienced in recent years. For a typical owner-occupier rolling off a fixed-rate deal in the next two years, monthly mortgage bills are likely to increase by an average of £45. This contrasts with the typical rise of £120 for those securing new deals between the end of 2022 and the end of 2024.
However, the Bank highlighted that approximately 750,000 homeowners currently paying less than 3% interest on their existing deals are set to roll off these products this year. These individuals are projected to face an average monthly repayment increase of £170.
More than 80% of mortgage customers in the UK have fixed-rate deals, where interest rates remain unchanged until the contract expires, typically after two or five years, at which point a new deal must be chosen.
The Bank projects that over two million borrowers with two-year fixed deals expiring by the end of 2028 will remortgage close to their existing rates, experiencing minimal changes in their repayments. Prior to recent international conflicts, these borrowers were expected to see their repayments decrease in the coming years, a scenario now considered unlikely.