£24/Month Rise in UK Mortgage Payments Following Interest Rate Hike: Full News Coverage

Updated on January 10, 2024

Explore this post for comprehensive details on the £24/Month Increase in UK Mortgage Payments Due to Interest Rate Hike: Full News Coverage.

£24/Month Upward Adjustment in UK Mortgage Payments

Despite signs of economic improvement, buyers are still facing pressure from rising interest rates. Several major lenders have implemented a £24 monthly increase in UK mortgage payments since the beginning of 2024 due to the rise in interest rates.

Following one of the most substantial rounds of interest rate hikes in decades, millions of fixed-rate mortgage agreements are expiring, compelling borrowers to renegotiate their home loans. This process is expected to result in an additional £19 billion in mortgage expenses for homeowners.

If you want a thorough understanding of the £24/Month Increase in UK Mortgage Payments, be sure to read this post in its entirety.

Understanding UK Mortgage Rate Trend

In response to the Bank of England’s move to raise the base interest rate from 0.1% to 5.25% to tackle surging inflation, mortgage rates surged throughout 2022 and the first half of 2023. Despite persistent high inflation, there has been a larger-than-expected slowdown in recent times, leading to an increase in mortgage rates.

Banks are mindful of the fact that high rates have deterred many from obtaining mortgages, leading to an increase in the number of people struggling with repayment. Despite the decline, average property prices remain £40,000 higher than pre-pandemic levels. Recognizing the need to sustain their business, banks are considering the necessity to reduce mortgage rates.

£24/Month Increase in UK Mortgage Payments Overview

UK Mortgage Payments Rise by £24/Month Following Interest Rate Hike

In recent months, the United Kingdom has witnessed a notable surge in both mortgage rates and rental rates, primarily attributed to a sharp increase in interest rates. In an effort to address the highest inflation among the Group of Seven major countries, the Bank of England has raised rates to 5%, marking a significant shift from the previous ten years when rates were below 1%.

The recent hike in the Bank of England base rate is anticipated to lead to an average monthly increase of approximately £24 for mortgage holders on tracker arrangements. As per data from the trade group UK Finance, the new 0.25 percentage point boost, elevating the base rate to 5.25%, is expected to generally add £23.71 to monthly tracker payments, translating to roughly £285 annually, contingent on the number of mortgages outstanding.

Taking into consideration all 14 base rate increases, average monthly payments for tracker plans are projected to have risen by £488.50. For SVRs, assuming that base rate increases have been fully passed on, the increase is estimated to be £311.90. This translates to an average annual rise of £3,742.80 for SVR customers and £5,862 for those with tracker mortgages. The Bank of England raises base rates as part of its efforts to control inflation.

Concluding Words

After experiencing an increase in the past year, mortgage rates have started to decline. In January 2024, lenders like HSBC, Halifax, and Leeds Building Society implemented reductions of up to 0.92 percentage points in fixed-rate mortgage rates.

The 13th consecutive interest rate hike by the Bank has particularly impacted young families in the city and surrounding areas, especially those with significantly large outstanding mortgages. This move is affecting consumers nationwide who hold various mortgage agreements.

In anticipation of the expected round of rate reductions, lenders are gearing up to compete by offering improved mortgage deals. This week, updates from TSB, Halifax, and HSBC on their fixed-rate offerings contributed to the lowest average rate on a two-year fixed home loan in almost seven months.

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