Commuter belt homeowners hardest hit by mortgage rate rises

By Liam On Mar 27, 2023

Homeowners in commuter belt counties will be hardest hit by the Bank of England rate hike, research suggests.

Each month, more than 17,000 residents in the Southeast reach the end of a fixed-rate mortgage — more than any other part of the country.

According to the data, the worst impact of more expensive home loans following the rate hike will be concentrated in commuter belt areas, including Cambridgeshire, Northamptonshire, Essex and Berkshire.

The House of Commons Library inquiry, commissioned by the Liberal Democrats, comes after the Bank of England raised interest rates from 4% to 4.25% last week.

It was the eleventh increase in a row and followed a surprise increase in inflation last month. Due to the increase, most homeowners who take out a new mortgage, or whose mortgage is due for renewal, will see interest rates rise.

Each month, more than 17,000 residents in the Southeast reach the end of a fixed-rate mortgage — more than any other part of the country

Those switching to a new two-year fixed-rate mortgage will face an increase of £655 per month, Lib Dem analysis suggests (file image)

Milton Keynes South – where the average house price is just over £357,000 – has the highest number of households (280) coming off their fixed rate mortgage each month.

According to the Lib Dems, a typical homeowner coming off their mortgage will now face a bill increase of £432 per month when they take out a new two-year mortgage.

Wokingham, the tenth hardest hit with 250 households coming off their fixed rate contracts each month, has an average house price of £541,520.

Those who switch to a new two-year fixed-rate mortgage will face an increase in their bill of £655 per month, the Lib Dem analysis suggests.

You can check how much more it would cost you to re-mortgage with This is Money’s best mortgage interest calculatorusing the value of your home and the size of the loan.

Sarah Olney said Central England will be hardest hit by interest rate hikes and the government’s failure to bring inflation under control has tied the hands of the Bank of England (file image)

The party urges the government to set up a fund to help young families who cannot afford the rise in mortgage payments and who are at risk of having their homes repossessed.

Under the proposals, homeowners whose mortgage payments have risen by more than 10 percent of their income can apply for grants of up to £300 a month to help cover costs.

When will interest rates start to fall?

Until recently, the market expected the base interest rate to peak at 4.5 percent in the coming months.

Now analysts are not so sure and think that the Bank of England will remain at 4.25 percent.

But regardless of whether we are at the peak or not yet, the forecasts are that rate cuts will set the tone.

The questions are when and how soon will they fall?

> Read: When will interest rates fall?

On the latest rate hike, Lib Dem Treasury spokesperson Sarah Olney said last night: ‘Central England will be hardest hit by rising interest rates.

The failure of the government to bring inflation under control left the Bank of England with only one choice. Unfortunately, it will be hard-working families who will suffer from out-of-control mortgage bills as a result.

The gross economic incompetence of the government has led to this point. Their inflation target is left in tatters and the economy still hasn’t recovered from Liz Truss’ failed budget.

“It is time for them to step in and save young families who are at risk of losing their homes because of this rate increase. Mid-England will never forgive the Conservative Party for putting their mortgage woes on them.’

In London, 13,000 households come off their fixed-rate subscriptions every month, followed by 12,000 in the North West. Our mortgage rate increase calculator shows the impact of the Bank of England increases.

The Lib Dems’ claims come as research shows that nearly half of us are concerned about keeping up with rent and mortgage payments in the coming year because of the cost-of-living crisis.

Financial firm Legal & General’s Rebuilding Britain Index found that 95 per cent of working households have taken a real wage cut in the past 12 months.

Lower-income households have been hit harder: 99 per cent of households with an income of less than £20,000 have received a real rebate.

Meanwhile, about 83 per cent of those with incomes over £100,000 in the past year are better off.

The figures also showed that 47 percent of households are worried they won’t be able to keep up with rent and mortgage payments in the coming year.

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