If rates increase by three percentage points, the average homeowner could face an additional £200 per month in mortgage repayments
BRACE YOURSELF: The squeeze on mortgage holders is set to tighten
Over a million mortgage holders with expiring fixed-rate deals will be impacted, and economists at Oxford Economics even suggest that a 0.5 percentage point increase is"not out of the question". It comes as the Government faces mounting pressure to fulfil its commitment of reducing inflation to 5.4 per cent by the year-end, aiming to halve the current rate.
The mortgage market has already experienced bouts of volatility, with major lenders temporarily pausing mortgage applications and increasing their rates. Last week, HSBC UK briefly withdrew some mortgage products available through brokers due to high demand from homeowners, and they are set to raise mortgage rates for the second time this week.
Myron Jobson, senior personal finance analyst for Interactive Investor, warns that more"mortgage misery looms" for borrowers renewing their deals in the second half of this year, especially those who secured rates below 2 per cent. But the Bank of England has said it will continue to raise interest rates so long as it sees signs of inflationary pressure.
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