Mortgage disaster as 400,000 households to see repayments rise by 'more than 50%'
Mortgage payments are forecast to skyrocket for millions of households
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Millions of families are being told to prepare for "very large increases" to their mortgage repayments over the next two years by the Bank of England.
The central bank's Financial Policy Committee (FPC) is sounding the alarm that three million households are likely to pay more with around 400,000 likely to see hikes of "more than 50 per cent".
This warning comes after the Bank's Monetary Policy Committee (MPC) voted to hold the country's base rate at 5.25 per cent last week.
Interest rates have been raised to a 16-year high and held at this level since August 2023 with homeowners bearing the brunt of the MPC's decision-making.
According to the Bank of England, high street lenders should still be able to assist families and businesses even if the economy worsens in the months ahead.
Based on the Bank's Financial Stability Report, the majority of households have already had an increase in their mortgage rates since borrowing costs began rising dramatically two years ago.
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The Bank of England base rate has held interest rates at a 16-year high since it was hiked to 5.25 per cent last August GB NEWSIn the last week, major banks including HSBC, Barclays and NatWest indicated there was renewed "optimism" as each implemented a series of rate cuts.
This led many analysts to suggest a potential base rate cut from the Bank of England could come as early as this summer.
However, Lloyds Bank's CEO warned that Britons should not expect mortgage rates to come under four per cent for the foreseeable future.
Based on Bank of England data, around 35 per cent of households with mortgages are paying below three per cent and will pay more between now and 2026.
This is the equivalent of three million households with the average family coming off a fixed-rate mortgage before the end of 2026 likely to face a hike of around £180 a month.
Furthermore, the Bank's report cited that an “increasing proportion” of households have opted to borrow over a longer period of time.
As result, families have seen a reduction in monthly repayments but have been pushed further into debt as a consequence.
Notably, higher interest rates on mortgages has led to many homeowners and renters being able to ringfence more of their hard-earned cash for savings.
On top of this, the Bank of England noted that the share of renters falling behind on payment jumped to 16.5 per cent in the first quarter of 2024.
In comparison, this figure was at 15.7 per cent this time last year.
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The Bank of England is being urged to cut interest rates to help homeowners GETTY The FPC report stated: “Investors in financial markets are continuing to expect the economy to recover and inflation to fall.
“They are placing less weight on risks, such as geopolitical developments or continued high inflation, that might cause weaker growth or interest rates to stay higher than expected.
“These risks make it more likely that there could be a sharp correction in asset prices that could ultimately make it more costly and difficult for UK households and businesses to borrow.”
The Bank of England's MPC is next expected to make an announcement regarding interest rates on July 4.