Cost of living: Millions to see annual mortgage payments rise by more than £5,000 in next two years, Resolution Foundation warns
More than five million households could see their annual mortgage payments rise by an average of £5,100 between now and the end of 2024, a leading think tank has warned.
In total, mortgage payments are set to rise annually by £26bn over the next two years, according to the Resolution Foundation.
Affected households in London will see the biggest increase, with average payments projected to rise by £8,000 over this period – more than twice the level of the £3,400 increase experienced by households in Wales.
The impact in London will be concentrated, however, as less than a fifth (19%) of households there have a mortgage.
“Households across Britain are currently living through an inflation-driven cost-of-living crisis as pay packets shrink and energy bills rise,” said Lindsay Judge, research director at the Resolution Foundation.
“With almost half of all mortgagor households on course to see their family budgets fall by at least 5% from higher payments, the living standards pain from rising interest rates will be widespread.”
While some homeowners on variable rate deals will see their costs increase immediately, the impact on the majority of mortgaged homeowners, who are on fixed-rate mortgages, will build over the coming years as they move off lower rates on to new deals, the think tank added.
Mortgages have been one of the many areas thrown into chaos following the government’s mini-budget at the end of September.
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Mortgage burden to hit 80s levels
Average two-year fixed mortgage rate now at highest level since 2008
The number of deals on the market nosedived after former chancellor Kwasi Kwarteng announced his fiscal policy in the House of Commons.
Lenders have gradually been bringing back new deals, but have increased their rates in doing so, with the average two and five-year fixed mortgage rates at their highest levels since 2008, standing at 6.47% and 6.29% respectively.
Read more: Markets react negatively to Truss speech spelling out corporation tax U-turn
On Friday, 3,112 mortgage products were on the market, compared with 3,961 on the day of the mini-budget, according to Moneyfacts.co.uk.
The Resolution Foundation explained that by early 2025, half of all mortgaged households will have seen higher mortgage costs absorb at least 5% of their net income, according to its current projections.
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Mortgages: Your questions answered
Higher interest rates will create ‘winners’ and ‘losers’
Higher income households will face the biggest increases in mortgage costs in cash terms on average, it added, but warned that lower income families will face the biggest rise as a share of their income.
Some households may be able to avoid higher costs by using savings to reduce their mortgage balance, or by downsizing to a less expensive home.
Read more:
Mortgages – What’s the best way to plan?
How rising costs will affect you
What’s happened to UK mortgage rates?
The think tank also noted that a period of higher interest rates will create “winners” and “losers”, with some people able to benefit from the increased rates, such as retired savers or those who are saving up to buy their first home.
“Regardless of how the future unfolds, it is fair to assume that higher interest rates will cause not only (often serious) problems for a very large number of households, but have significant political ramifications as well,” the foundation stated.
UK
Philip Young appears in Swindon court charged with 56 sexual offences against ex-wife – as five others also charged
A man has appeared in court charged with drugging and raping his ex-wife over a 13-year period.
Philip Young, 49, formerly of Swindon, has been charged with 56 offences, including multiple counts of rape, against Joanne Young.
He is also charged with administering a substance to allow sexual activity, as well as voyeurism, possession of indecent images of children and possession of extreme images.
Young appeared at Swindon Magistrates’ Court this morning and spoke only to confirm his name and address.
He declined to enter a plea and was remanded in custody until the next hearing at crown court on 23 January.
Philip Young was remanded in custody
The 49-year-old was taken to court in Swindon on Tuesday morning
Five other men have also been charged with sexual offences against Ms Young between 2010 and 2023. The 48-year-old has waived her legal right to anonymity.
The other men are on bail but are due in the same court at 2pm.
They are: Norman Macksoni, 47, of Sharnbrook, Bedfordshire. He is a black British national and has been charged with one count of rape and possession of extreme images.
Dean Hamilton, 47, of no fixed abode. He is a white British national and has been charged with one count of rape and sexual assault by penetration and two counts of sexual touching.
Conner Sanderson Doyle, 31, of Swindon. He is a white British national and has been charged with sexual assault by penetration and sexual touching
Richard Wilkins, 61, of Swindon. He is a white British national and has been charged with one count of rape and sexual touching
Mohammed Hassan, 37, of Swindon. He is a British Asian and has been charged with sexual touching.
The alleged offences took place between 2010 and 2023.
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