Mortgage Mayhem: UK Homeowners Braced for £26bn Annual Payment Surge
London Hit Hardest by Mortgage Hikes
Mortgage payments across Britain are set to rocket by a staggering £26 billion a year over the next two years, warns the Resolution Foundation. Londoners will bear the brunt, facing an eye-watering average increase of £8,000 — more than double the £3,400 rise expected in Wales.
But the pain won’t be evenly spread. Less than a fifth (19%) of households actually have mortgages, so the squeeze will hit some pockets far harder than others.
Cost-of-Living Crisis: Mortgage Payments Squeeze Budgets
“Households across the UK are battling an inflation-driven cost-of-living crisis as pay packets shrink and energy bills skyrocket,” said Lindsay Judge, research director at the Resolution Foundation.
Nearly half of mortgaged families face mortgage hikes so big they’ll slash their budgets by at least 5%. Rising interest rates threaten to drag down living standards nationwide.
Fixed vs Variable: Mortgage Rates Climb Fast
Variable-rate borrowers are feeling the sting now, but most with fixed-rate deals will see costs surge as they move to pricier new agreements. The mini-budget chaos last year caused mortgage deals to disappear overnight and lenders to jack up rates.
Today, two- and five-year fixed mortgage rates stand at their highest since 2008, at 6.47% and 6.29% respectively.
Fewer Deals, Higher Rates
Mortgage choices have shrunk. Moneyfacts.co.uk shows just 3,112 mortgage products on the market last Friday, down from 3,961 before Kwasi Kwarteng’s mini-budget.
The Resolution Foundation warns that by early 2025, half of mortgaged households will see their mortgage payments eat up 5% or more of their net income. The mortgage squeeze is only just beginning.
