Mortgages could increase by £3,300 a year for a million UK households as rates set to rise again

Source: iNews — 

Up to a million households face another hike in mortgage costs if the Bank of England increases interest rates again this week.

The Bank of England Monetary Policy Committee (MPC) will meet on Thursday and is widely expected to raise rates by another 0.5 per cent to 4 per cent.

The rise will mean around a million mortgage holders who are set to come to the end of record low fixed rate deals this year face an increase in annual repayments of thousands of pounds.

There are also warnings that homeowners will see further dramatic falls in the value of their properties as mortgages become increasingly unaffordable.

A household with an average mortgage debt of around £138,000 who agreed a fixed-term deal of around 1.5 per cent during the period of historically low rates would see their monthly mortgage repayments rise from £552 to £827, or £3,300 more each year.

While the official Bank of England interest rate is 3.5 per cent, the average fixed-term rate is around 4.75 per cent for a two- or three-year deal.

These deals are likely to rise to at least 5.25 per cent if the Bank of England does raise rates by another 0.5 percentage points.