Mortgage prices to rise for 3 million, says Bank of England | EUROtoday

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About three million households are set to see their mortgage funds rise within the subsequent two years, the Bank of England has mentioned.

The Bank’s newest Financial Stability Report additionally mentioned about 400,000 mortgage holders are going through some “very massive” payment increases.

Renters remain under pressure from the higher cost of living and higher interest rates, the report found.

However, the Bank said that overall risks to the UK financial system were broadly unchanged, and businesses and households remain resilient.

The Bank found that about one third of mortgage holders, more than three million, in the UK are still paying rates of less than 3%.

These will mostly be people who arranged mortgage deals before the Bank of England started to increase interest rates in late 2021.

These mortgages are now expiring, and the Bank said the majority of fixed rate deals will finish before end of 2026.

For the typical household, monthly mortgage repayments are forecast to increase by around £180, or around 28%.

However, for around 400,000 households, monthly payments could jump by 50% or more.

Despite this, the amount of people struggling to pay their mortgage is still expected to stay below levels seen after the 2008 global financial crisis.

“The total share of households who’re behind in paying their mortgages stays low by historic requirements,” the report states.

In contrast, the proportion of people falling behind on rental payments has risen from 15.7% to 16.5%.

This is said to be the result of landlords passing on the cost of higher mortgage interrest rates on to their tenants.

Overall, the Bank said that UK banks were still in a good position to assist businesses and households.

“The UK banking system has the capability to help households and companies, even when financial and monetary circumstances had been to be considerably worse than anticipated,” its report said.

The Bank highlighted some “international vulnerabilities”, including political uncertainty in the UK and abroad, that could impact the sector.

It said upcoming elections worldwide could “result in monetary market volatility”.