The mortgage crunch
Think tank: Resolution Foundation
Author(s): Simon Pittaway
June 17, 2023
This report from UK think tank Resolution Foundation looks at how much annual repayments are set to rise for those re-mortgaging.
Recent signs that inflation is proving ‘stickier’ than hoped has raised the prospect of even more rate rises from Bank of England, and a deeper mortgage crunch for households. Higher than expected inflation and earnings in April has led financial-markets expectations of the peak to the current interest rate rise cycle to rise to nearly 6 per cent – close to levels seen after the fallout from ‘Trussonomics’ last autumn. This is swiftly translating into higher mortgage rates: annual repayments are now on track to be £15.8 billion a year higher by 2026 compared to when the Bank started raising rates in December 2021, up from £12 billion as recently as May. Annual repayments for those re-mortgaging next year are set to rise by £2,900 on average – up from £2,000.
