One in 5 Britons heading for mortgage pain: think-tank
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ONE in five families in Britain will take a financial hit from having to pay more for their mortgages between now and 2024 with about a quarter of the increase caused by the recent market turmoil, a think-tank said on Saturday (Oct 15).
The Resolution Foundation, which focuses on issues facing lower-income households, said more than 5 million families will see their annual mortgage payments rise by an average of £5,100 (S$8,130.06) over the next two years.
Of that, £1,200 reflected the expectations of higher interest rate rises since the Sep 23 “mini-budget” that prompted a surge in borrowing costs with its unfunded tax cuts.
“With almost half of all mortgagor households on course to see their family budgets fall by at least 5 per cent from higher payments, the living standards pain from rising interest rates will be widespread,” Lindsay Judge, research director at the Resolution Foundation, said.
The Bank of England (BoE) has raised its benchmark borrowing rate from 0.1 per cent last December to 2.3 per cent now and is expected to announce another big increase on Nov 3 followed by more which will take Bank Rate above 5 per cent, according to bets in financial markets.
The BoE is trying to get a grip on inflation running at nearly 10 per cent and economists say the tax cuts promised by Truss - even after her U-turn decision on Friday not to block an increase in corporation tax - will add to price pressures.
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The Resolution Foundation said 1.2 million mortgage-holding households on variable rate deals would see their housing costs rise with Bank Rate while 85 per cent with fixed-rate deals would see their cost build more gradually. REUTERS
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