Millions of homeowners could face £1,000 hike in mortgages if interest rates keep rising
- Homeowners can expect higher mortgage bills if interest rates keep rising
- Analysts predict the base rate could hit one per cent before the end of year
- The higher rates are expected to put more pressures on struggling families
Millions of homeowners face mortgage bill hikes of around £1,000 next year if interest rates continue to rise as expected.
The Bank of England’s decision to increase the base rate from a record low 0.1 per cent to 0.25 per cent yesterday will add an extra £144 a year to the cost of a typical home loan.
And some analysts predict it could hit 1 per cent before the end of next year. This would see borrowers with a typical £150,000, 25-year mortgage, on a standard variable rate of 3.59 per cent, pay an extra £75 a month, or £900 a year, according to broker L&C.
Huw Pill (pictured), the Bank of England’s chief economist, said he believes there are more rate rises to come
Asked if there were more rate rises to come, the Bank’s chief economist Huw Pill said: ‘Yes, I think that is true.’
He said concerns around soaring inflation, tipped to hit a 30-year high of 6 per cent next year, meant the ‘time had come to act’.
Yet higher interest rates will pile yet more pressure on struggling families whose budgets are already being squeezed by a perfect storm of household bill and tax hikes.
Millions of homeowners face mortgage bill hikes of around £1,000 next year if interest rates continue to rise as expected (file photo)
The average household energy bill is set to soar to as high as £1,891 a year from April, while food, petrol and council tax costs are all rising too.
It came as Halifax predicted that house price growth will slow dramatically next year, with average increases in the range of 0 to 2 per cent.
The average property price rose by 8 per cent this year.