millions face mortgage rate rises

The current volatility in financial markets has had a direct impact on mortgage rates, with anticipation of further interest rate rises fueling recent market instability and influencing the availability of mortgage products.

A recent survey warns that over three million individuals in the UK could potentially face a 'remortgage nightmare.' Approximately 40% of mortgage holders have not experienced payment increases due to fixed-rate deals, but one in five respondents reported monthly payment increases exceeding £200 over the past eighteen months. Additionally, 16% are already struggling to meet their mortgage obligations, with this figure rising to 21% among those aged 55 and above. Nearly half (48%) admitted they would face difficulties if monthly repayments increased by just £150.

For those with deals ending within the next year, average monthly payments could rise by £192, a scenario that two-thirds of respondents claimed would cause financial strain. With approximately 1.3 million fixed deals set to expire in 2023, many at rates below 2%, the prospect of rates remaining around the current average of 5.5% poses a potential disaster for hundreds of thousands of borrowers.

The most significant payment increases will be felt by those with larger mortgages, including higher-income individuals who purchased more expensive properties and younger buyers who entered the market at inflated prices. Already, one in four 18 to 34-year-olds reported monthly repayment increases exceeding £200.

While there's a possibility of market overreaction and subsequent rate reductions, any significant decrease in mortgage costs may require a Bank of England rate cut, which isn't anticipated until 2024.