British households renewing their mortgage agreements could pay nearly £3,000 more a year after the benchmark lending rate surged to a 15-year high, the Bank of England has warned.
The Bank of England’s Financial Stability Review, released today, shows that by the end of 2026, more than 4 million mortgage holders will face higher interest rates when they renew.
The figures underscore the strain on households from the Bank of England’s fastest series of rate hikes in 30 years.
At current interest rates, a typical household’s mortgage costs would rise by £220 a month in the second half of 2023, equivalent to an increase of £2,640 a year, the Bank of England said.
Around 1 million households will see their monthly payments increased by more than £500 by the end of 2026.
Some are using their savings to pay off their loans, reducing the amount of their mortgage to refinance.
The BoE also warned that an exodus of buy-to-let landlords facing higher mortgage costs could hit house prices.