BANK OF ENGLAND RAISES MORTGAGE FORECAST TO 5.2 MILLION HOMEOWNERS

The Bank of England has revised upwards its projection of homeowners facing higher mortgage repayments, now forecasting that just over five million will experience increased bills by the end of 2028. This represents an increase from the four million homeowners the Bank projected in December. The revision reflects the impact of geopolitical tensions, specifically the Iran conflict, on economic forecasts. The Bank's Financial Stability Report noted that whilst the increase affects more households than previously anticipated, the financial burden is expected to be less severe than rises experienced in recent years.

A homeowner remortgaging within the next two years can expect a typical monthly increase of £45, according to Bank figures. This contrasts with the average rise of £120 recorded for those obtaining new mortgage deals between the end of 2022 and the end of 2024. Over eight in ten mortgage customers hold fixed-rate deals, meaning their interest rates remain unchanged until their agreement expires, typically after two or five years. The Bank's report indicated that lower-income households and renters face greater exposure to higher energy costs, as they allocate a larger proportion of their income to essential expenses.

The Bank assessed that overall household finances remained resilient within the challenging external environment. Household debt levels remained low relative to historical averages, the Bank reported. Whilst some vulnerable, lower-income households faced increased exposure to price pressures, the Bank stated that debt levels were unlikely to produce sharp reductions in consumer spending. The Financial Stability Report also highlighted elevated cyber security risks arising from rapid advances in artificial intelligence.