The millions of households that have to remortgage this year face a 50% increase in their repayments, according to the National Institute of Economic and Social Research (NIESR).
The research says that households are about to be hit by yet another shock as a result of the Bank Rate rising to 5 per cent, and by the end of 2023 more than a million households (4 per cent of all UK households) will run out of savings because of higher mortgage repayments, taking the total proportion of insolvent households to nearly 30 per cent (around 7.8 million).
With the Bank Rate rising at their fastest pace since the Bank of England gained independence in 1997, millions of households will be affected by higher mortgage repayments.
A significant proportion of the population will see their savings wiped out because of the rise in interest rates and thus higher mortgage repayments. The largest impact will be felt in Wales and the North-East where up to 6 per cent of households are projected to be insolvent by the end of the year as a direct result of rising mortgage repayments.
Also, the analysis finds that the rising repayments in aggregate will wipe out 0.3 per cent of UK GDP, costing all households with mortgages a total of £12 billon per year.
Max Mosley, NIESR Economist, said “The rise in interest rates to 5% will push millions of households with mortgages towards the brink of insolvency. No lender would expect a household to withstand a shock of this magnitude, so the government shouldn’t either. Some investment should be done in forbearance agreements, giving households and lenders the ability to create payment plans that work for each other.”