Bank of England Issues Mortgage Warning for 5 Million Homeowners
Five million homeowners are now expected to face higher mortgage repayments by the end of 2028, according to the Bank of England's latest Financial Stability Report. The BoE warns an additional one million households are now expected to see their mortgage costs increase compared with projections made in December.
Five million owner-occupiers will experience higher monthly mortgage repayments before the end of 2028, up from the four million previously forecast. Homeowners whose fixed-rate mortgages expire over the next two years are expected to see a typical increase in monthly repayments of around £45.
Comparison with Previous Increases
That compares with an average monthly increase of £120 experienced by borrowers who refinanced between late 2022 and the end of 2024, following a period of financial market volatility and successive increases in the Bank Rate. Around 750,000 homeowners whose fixed-rate mortgages carry interest rates below three per cent are due to see those deals expire this year, with average monthly repayments expected to increase by £170.
Impact on Fixed-Rate Borrowers
Two million households whose two-year fixed-rate mortgages expire by 2028 are expected to remortgage at interest rates similar to those they currently pay. It comes as the average UK house price increased on a month-on-month basis for the first time in four months in June, according to an index.
House Price Trends
Property values rose by 0.2% month on month typically in June, marking the first monthly increase since February, Lloyds said. Annual house price growth also accelerated to reach 0.6% in June, from 0.5% in May. Tom Bill, head of UK residential research at Knight Frank, said: “House prices are going sideways and transactions are falling as the result of higher mortgage rates since the start of the Middle East conflict.”
Market Resilience
Iain McKenzie, chief executive officer of The Guild of Property Professionals, said: “The return to monthly house price growth is an encouraging sign that the market continues to demonstrate resilience despite a challenging economic backdrop. Buyers remain cautious, but we’re seeing confidence gradually improve as inflation remains relatively contained and expectations for interest rates have become more stable.”
