Mortgage hell as a million households face paying extra £500 a month, Bank of England warns
NEARLY one million Brits face forking out £500 extra a month on mortgage costs, the Bank of England has admitted.
After raising interest 13 times in an attempt to tame inflation, the Bank accepts households “may struggle with repayments” on home loans.
Its governor Andrew Bailey said that rates of repossessions or defaults would not be as bad as in the 2008 or 1990s financial downturns.
However, he said the rocketing cost of living and higher mortgage payments would put more pressure on lower income families.
The bank rate has risen rapidly from 0.1 in December 2021 to a 15-year high of five per cent.
Most home loan households are on fixed rates but will feel the shock when their deals are up for renewal.
The average household remortgaging this year will face rises of £220 a month.
The Bank said around 650,000 will be spending at least 70 per cent of their income after tax and other utility bills on their mortgage by the end of this year.
Around three million will be paying up to £500 more a month by the end of this year, while nearly one million will have to pay at least £500 extra by 2026.
Thousands face a minimum £1,000 increase.
The UK inflation rate, currently 8.7 per cent, has so far remained much more stubborn than elsewhere.
Savings support
ONE in four Brits have less than £100 in savings, NatWest says
The bank has set out plans to help households by encouraging them to kickstart savings.
Boss Alison Rose told The Sun: “This will ensure families are given the tools to take control.”