UK households are facing even more mortgage problems as interest rates rise and monthly costs rise, while inflation is unlikely to improve as long as inflation remains stubbornly high.
Homebuyers and homeowners looking for a new loan today must pay a rate of more than 6 percent for a two-year period — more than double the average interest rate two years ago.
Now the Bank of England is expected to raise key rates by 0.25 percentage point to 4.75 percent tomorrow, but it could even rise by 0.5 percentage point.
A 0.25 point increase in the base rate could add an estimated £23.71 to the average monthly mortgage payment, while a 0.5 point increase could add £47.43.
The average two-year fixed residential mortgage rate today was 6.15 percent, while the average five-year interest rate was 5.79 percent, according to Moneyfacts, which added that there were now 4,498 residential mortgage products available.
It comes after it was revealed today that inflation remained at 8.7 percent in May – the same level as in April, despite experts predicting a drop to 8.4 percent.
Meanwhile, the crippling impact of rising interest rates was exposed today with estimates that 1.4 million Britons are at risk of losing at least a fifth of their disposable income.
Here, MailOnline talks mortgage holders about the issues they face:
Couple from Bradford say an increase in bill of £800 will get in the way of their wedding plans
Amy Adams, 28, and her fiancé Ashley Heatherington, 29, who live in Bradford
Two years ago, when Amy Adams, 28, and her fiancé Ashley Heatherington, 29, bought their first home, they were optimistic that interest rates would continue to fall.
The couple, from Bradford, West Yorkshire, bought their three-bedroom new build in December 2021 using a 20 per cent loan from the government to buy.
They are currently paying £700 a month for their £160,000 mortgage with Precise, which offers a rate of 4.89 per cent.
These payments will more than double in December, when their current mortgage agreement expires.
Miss Adams said: ‘Our mortgage adviser says if we take out a new mortgage our payments could increase by £800 a month.
“It’s a very stressful situation. We both work in the NHS as data analysts and we are hoping for a pay rise this month.
“But even if we get an increase, it won’t cover the increase in our mortgage payments.”
Their high level of spending means the couple has to cut back elsewhere, for example on vacations. They are also scaling down their wedding, which is scheduled for next year.
Miss Adams said, ‘My parents are always willing to help, but I don’t want to ask them because they already contribute to our wedding. It’s certainly a worrying time.’
Financial adviser will cut social charges after a £350 increase
Luke Thompson, of King’s Lynn, Norfolk
An experienced financial advisor has revealed he will have to cut social security contributions after his mortgage was recently increased by more than £350 a month.
Luke Thompson, based in King’s Lynn, Norfolk, told MailOnline: ‘I’m a mortgage advisor and financial advisor and recently had to take out a new fixed rate on my mortgage.’
The director of PAB Wealth Management added that the increase in costs had prompted him to rethink his monthly budget.
He said: ‘My mortgage has increased by over £350 and this worries me as it will weigh on my monthly income and limit the money I spend on social spending.
Marketing expert sees total payments rise from £1,200 to £1,300
Craig Webb of Bicester, Oxfordshire, said he and his wife now have three mortgages
A marketing expert who quit his salaried job in January to focus on his own business said he will find it more difficult to secure a new mortgage deal.
Craig Webb said he and his wife, who is a nurse, have three mortgages because they have expanded their home over the years to accommodate their three teenagers.
Mr Webb, based in Bicester, Oxfordshire, said the mortgages expire at different times, but one of the mortgages has recently been extended, with total payments going from £1,200 to £1,300 a month.
He told MailOnline: ‘I have offset some of this cost as my commute was an hour away, which I no longer need to fund.
“I’d say our food bill has been bigger than the mortgage so far, as a family of five.”
Mr Webb, owner of Webb Marketing Services, which specializes in marketing for the hospitality industry, also said his departure earlier this year ‘might seem risky but I feel I’m safer with ten clients than one employer’.
But he added: “As I now work for myself, a new mortgage will be more difficult to obtain.”
Mortgage rates will ‘more than double’ when the fixed rate expires
Author John Lamerton, of Plymouth, Devon
A business author has revealed that the interest on my mortgage “more than doubles” when his fixed-rate contract expires.
John Lamerton, owner of Big Idea Ventures and author of the 2017 book ‘Big Ideas… For Small Businesses’, told MailOnline: ‘As a small business owner, we’ve seen businesses decimated by Covid lockdowns, hammered by out-of-stocks. – keep inflation under control, and destroyed by the crisis of the cost of living.
Rising interest rates are just another nail in the small business owner’s coffin — and no one is coming to save us. The government’s response is to tax small businesses at a higher rate than ever before.”
The former civil servant from Plymouth, Devon, added: “Would the UK’s last small business turn out the lights?”
The small business owner faces refunds of £900 to £1,800
Stuart Crispe, whose small business is based in the City of London
A small business owner has pointed out the irony of starting his business to help people with their mortgage and financial needs – but “now I need help.”
Stuart Crispe told MailOnline that because he recently became self-employed, he cannot verify his income and therefore his only option is to switch to a standard variable rate mortgage.
The founder of Sunny Avenue, a directory service for financial services firms based in the City of London, added that this would increase his mortgage payments from £900 to £1,800.
He said, “It makes me wonder if I can afford this venture after all. There has been absolutely no support from the government, my company has paid a fortune in VAT only to end up in this position with no support.
“I have no idea what to do, but just keep grafting.”
The overall CPI came in at 8.7 percent in May, the same as the figure for April – defying hopes of a fall
Homeowner may need to move to Australia for cheaper living
When his current mortgage deal expires in October, Jamie Madden was shocked to learn that his monthly payments could increase by £200 per month.
The 33-year-old health and safety manager from Devon had bought his three-bedroom semi-detached townhouse in Seaton in 2021 and took out a two-year fixed-rate mortgage with Barclays paying £450 per annum. month.
But speaking to a mortgage broker last week, the new dad was shocked to be told a monthly payment of £550.
And in just a week, rates have risen so much that he now faces £650 a month repayments.
Mr. Madden said: ‘It’s very stressful because it’s just me and my partner, Marissa, and she can’t work because she’s looking after our little boy, Reuben.
‘It’s difficult at the moment as our fixed energy tariff ends next month which will add an extra £50 a month to our bills. I won’t even have that left at the end of the month.’
He added: ‘We are even considering moving to Australia for a cheaper lifestyle.’
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