- Over the course of the 2023 alone, the base rate increased from 3.5% to 5.25%, surpassing economists’ expectations and pushing mortgage rates to the highest levels since 2008.
- For some people, repayments have increased by hundreds of pounds overnight.
- Many people facing increased monthly mortgage payments were already managing stretched budgets due to the rising cost of living.
- Mortgages of 35 years or more have increased from around 5% to 12% of the market in the last two years.
Where are rates headed in 2024?
Signs that households are struggling to keep up with mortgage payments are getting stronger, with more people now falling into arrears. Although less severe than previously forecast, industry body UK Finance expects arrears and possessions to continue to rise. Arrears and repossessions are rising
- And as more homeowners come off the cheap fixed rates of pre-2022 period, around 2.3 million households are expected to face higher rates in 2024, with an average monthly repayment increase of £240.
- The Bank of England has forecast that around 440,000 households will struggle to afford these increases.
- So, we may well have passed the peak for interest rates.
- In early January, Halifax cut some rates by nearly 0.8% and HSBC also announced reductions for certain products.
- Rates still remain high compared to recent years, but this downward trend will continue to help household finances this year.
- But it’s unrealistic to expect the mortgage rates to return to the 325-year lows observed between 2008 and 2021.
- Read more:
Five ways to reduce your mortgage repayments in 2023 – and why rates have risen so high
What to do if you need a mortgage in 2024
- They also may have access to better deals than you can find yourself online or through your bank.
- If you are on a fixed-rate mortgage that is about to end in 2024, make sure to check your lender’s standard variable rate (SVR).
- Recently, the UK’s mortgage lenders agreed with the government on a number of measures to support people struggling with their mortgage repayments.
- So, if you are worried, it’s best to talk to your bank in advance about how it can help.
Alper Kara does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
