Mortgage costs are rising, adding to the financial pain for UK households already struggling with the cost of living. Photo: Toby Melville/Reuters
UK households are struggling to pay their mounting mortgages, with outstanding debt rising by almost double digits to £14.9bn.
Homeowners’ monthly payments rose 9.5% in the first three months of the year and 12.5% from a year earlier, to £14.9 billion, according to the latest figures from the Bank of England.
This is the most it has seen since the start of 2021 and now accounts for about 1% of all mortgage balances.
Lenders are raising prices on some new and existing mortgages, with NatWest announcing a 1.57% percentage increase on some buy-to-let loans this Tuesday.
Read more: UK households to pay £9bn more as mortgage costs rise
Santander halted new applications for some products last night ahead of the launch of the new range tomorrow.
The value of new mortgage commitments was down 16% compared to the previous quarter, highlighting a decrease in loan demand due to rising interest rates.
Only £48.9bn has been agreed to be exhausted in the coming months between January and March this year, the lowest figure since mid-2020.
Overall, the outstanding value of all residential mortgage loans stood at £1,675.4bn at the end of March, up 2.7% from a year earlier but having decreased in the previous quarter for the first time since mid-2017.
Karen Noy, mortgage specialist at Quilter, said: “Sadly, the picture is likely to worsen in the near term as once again the mortgage market has gone through a very turbulent period over the past week and rates are becoming more expensive Even more pressure on an already stretched budget has been driven by a number of factors, including the withdrawal of mortgage products and rising rates by lenders over the past few weeks.
“The prevailing reason for this change is the prediction of higher-than-expected inflation of 8.7% in April that the Bank of England will raise interest rates to higher levels than before. This fear has made some big-name lenders capitulate. alerted and prompted them to withdraw the products and then raise their rates to protect against future losses.”
Data from Uswitch shows the average two- and five-year fixed-rate mortgages were sitting at 5.94% and 5.59% respectively on Monday – up from 5.64% and 5.04% on June 1.
Average Mortgage Rates:
Rates (June 1)
Rates (June 8)
% change from last week
2 year fixed rate mortgage (75% LTV)
Five Year Fixed Rate Mortgage Rate (75% LTV)
Two-year variable-rate mortgage rate (75% LTV)
2 year fixed rate mortgage (90% LTV)
Standard Variable Rate (SVR)
Adam Oldfield, chief revenue officer at Phoebus Software, said: “The fact that the number of mortgages in arrears is rising is worrying but not unexpected. With the ONS reporting that 1.4 million UK households could end their fixed-rate deals in 2023 Will see, this is not a short term concern.
“This prospect has the potential to further rout the market and home prices could begin to decline. Brokers and lenders are undoubtedly facing a challenging time, but where there is challenge there is usually opportunity. More The most important thing is to identify those opportunities while taking care of the exposed borrowers.
Read more: Interest rates are set to rise due to a jump in salary hike
Steven Morris, advisory director at Advantage Financial Solutions Ltd, said: “We took a rate cut and there were rate increases across the board. Some increases with high street lenders were as high as 1.57%. Stopped it. Was only given a withdrawal deadline of a few hours. Right now my advice to clients is don’t even bother with taking collateral advice unless you are ready to apply within a few hours Be
“Send your broker documents as soon as possible and in advance if possible or you don’t even stand a chance of getting a deal before you withdraw it.”
See: How much money do I need to buy a house?
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