Bank of England warns of more mortgage pain to come for homeowners
Suburban residential properties and distant city high-rises in Ruskin Park, a public green space in Lambeth, on 11th June 2023, in London, England.
The Bank of England warned already struggling homeowners could see monthly mortgage repayments rise sharply in the coming months, but stressed households today are not nearly as indebted as they were in the run-up to the global financial crisis.
U.K. households are currently being impacted by a cost-of-living crisis and higher interest rates as their fixed-rate mortgage deals expire.
In the BOE's Financial Stability Report, published Wednesday, the central bank said its model shows that over 2 million mortgage holders will see monthly payments increase between £200 to £499 ($259 to $645) by the end of 2026.
Almost 1 million people, meanwhile, were projected to see their monthly mortgage costs jump by more than £500 over the same timeframe.
The BOE said that the amount of household debt remains "some way below" the historic peak reached in 2007, however.
The central bank's report comes shortly after the U.K.'s average 2-year fixed mortgage rate rose to its highest level since 2008, deepening fears of an impending "mortgage catastrophe."
The average rate of a two-year fixed deal rose to 6.70% on Wednesday, according to figures from data provider Moneyfacts. This key mortgage rate came in at 6.66% on Tuesday, notching its highest level for 15 years.
Source: CNBC
