UK Finance has revealed the impact on the average variable rate mortgage should the Bank of England (BofE) increase the base rate once again on Thursday.
Despite UK inflation falling from 8.7% to 7.9%, many economists are predicting the BofE may raise the base rate by 0.25% or even 0.5%.
It currently stands at 5%.
UK Finance – the trade association for the UK banking and financial services sector – says a 0.25% increase would see the average monthly repayment for a tracker increase by £23.71.
The average standard variable rate (SVR) mortgage repayment would rise by £15.14 a month.
Meanwhile, a 0.5% increase to the base rate would see the average monthly mortgage payment for those on a tracker rise by £47.43 and those on a SVR by £30.28.
UK Finance estimates there are around 800,000 fixed-rate deals ending in the second half of 2023, while around 1.6m deals are due to end in 2024.
According to the company, there are a total of 8,840,000 residential mortgages outstanding, the bulk of which – just over 6.8m – are fixed rate.
An estimated 639,000 (8%) are on a tracker, while 773,00 (9%) are on an SVR.
UK Finance says these borrowers won’t see any immediate change in their monthly payment if the base rate rises.
There are just over two million buy-to-let mortgages (BTL) outstanding, with the majority (66%) also being on fixed rates.
Of the remainder, 291,583 are on a tracker and 362,596 on an a SVR.
Despite rate rises and increases in mortgage repayments, UK Finance says the number of arrears and possessions remain at low levels.
It expects that the number of households in arrears in 2023 to remain below 1% of outstanding mortgages.
In the year prior to January 2023, lenders helped over 200,000 borrowers who couldn’t meet their full mortgage payments and more than two million who needed financial difficulty assistance.
Support for people struggling with their repayments include extending the term of the mortgage, making a temporary switch to interest-only payments, a temporary reduction in repayments or taking out a part interest-part repayment plan.
In addition, 46 mortgage lenders representing over 90% of the mortgage market have signed up to the government’s new Mortgage Charter.
