According to the latest update from the Bank of England, about 3.6 million households (40% of mortgage holders) may see their monthly payments increase over the next three years.
The bank’s financial stability report shows that about 30% of homeowners have not refinancing since interest rates began to climb in 2021. As a result, many are still immune to the full impact of stricter monetary policies, but with the expiration of their fixed-rate transactions, their costs will face higher costs.
While the proportion of households that have not yet been refinancing has dropped from 50% in November to 30% today, the report notes that there are still a massive payment shock now and in the mid-2028.
But, for borrowers, there is some good news. About 2.5 million households (28% of all mortgage holders) are expected to see their monthly repayments until June 2028. This includes homeowners currently with about 1.5 million, currently with variable interest rates that will benefit from any future lower rate reductions.
As financial markets expect that the bank’s update may begin to ease later this year if inflation continues to decline. However, millions of costs are still supporting higher costs until any relief is realized.
