Homeowners face £500 mortgage monthly payments jump this year

12th July 2023

Mortgage payments will rise by at least £500 a month for nearly one million households by the end of 2026, according to the latest Financial Stability Report from the Bank of England. (BoE)

Housholds on fixed deals who remortgage by the end of 2026 will see a sharp jump in costs of at least £6,000 a year.

Of the near-million facing an increase of at least £500-a-month, around 200,000 will see their bills rise by £1,000 or more. In the shorter term, the average household coming off a fixed rate deal in the second half of 2023 will have to pay about £220 more a month if they refinanced at current rates. The proportion of households under pressure because of rising mortgage payments had risen from 1.6% in November 2022 to about 2%.

The BoE said, with the figure likely to reach 2.3% by the end of the year, affecting about 650,000 households. 

 Forecasts show that of the 4 million homeowners expected to roll on to new mortgage contracts over the next three years, the majority will be paying up to £220 more a month to cover the mortgage by the end of this year because of the difficulty of finding contracts with comparable rates.

The payments of more than 1 million borrowers are likely to rise by more than twice that amount by the end of 2026.

Bank  of England Governor, Andrew Bailey said “It is going to have an impact, clearly. That is part of the transmission of monetary policy, no question about that. And I’m going to come back to the point we’ve made a number of times … we are trying to balance having the transmission function of monetary policy with two things … one is the resilience of the banking system, and two, its ability to support customers and manage the consequences of this. But there still will be consequences of increased interest rates.”