Rosebud Baker

Mortgage rates are falling but borrowers are still feeling the squeeze – a finance expert explains how to cut your repayments

Retrieved on: 
Wednesday, January 3, 2024
People, Budget, Rosebud Baker, HSBC, Bank, SVR, Risk, Bank of England, Monetary Policy Committee, Pressure, Government, UK Finance, News, Real estate

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.

Key Points: 
  • 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.

How the UK's mortgage rescue deal could help or hurt you – in part depending on where you live

Retrieved on: 
Monday, July 3, 2023
Government, Pain, FCA, Bank, Research, Rosebud Baker, Risk, Income, SVR, Credit, Real estate

This rate feeds through to many of the mortgage deals taken out by homeowners around the UK.

Key Points: 
  • This rate feeds through to many of the mortgage deals taken out by homeowners around the UK.
  • Borrowers will be able to return to their original deal within six months without any impact on their credit rating.
  • But while these measures will help some borrowers, they could cause unintended consequences and create further mortgage payment issues.
  • There is also the question of which lenders will participate in mortgage rescue plan – it is a voluntary scheme.

How mortgages differ by region

    • Payment shocks will be amplified for those in the areas with higher house prices and higher average loan amounts.
    • The table below shows the difference in the increase in repayments for an average loan amount across the UK, based on different types of mortgage product.
    • This is because when repayment borrowers pay interest plus equity, the total interest charged on a mortgage falls as the remaining debt decreases.
    • This means the exposure to overpayment when choosing to pay interest-only for the six-month rescue period would be:
    • Regional differences will also come into play here when considering exposure to payment shocks and excessive mortgage payments.
    • This is because households in regions with higher house prices borrow larger loans and so repay more over the life of the loan.

Searching for a solution

    • There is no straightforward solution to this situation, particularly since mortgage rates operate at the national level.
    • A light-touch intervention, such as temporary caps on lenders’ profit margins could help.