There's A Lot Of Mortgage Pain Coming

27th June 2023

BOE Governor Andrew Bailey said Thursday's interest rate rise was necessary to continue the fight against stubbornly high inflation.

Official figures published ahead of the BOE's meeting showed annual inflation rose by 8.7% in May, exceeding expectations. It means consumer prices remain at a level far above the BOE’s 2% target.

"We know this is hard — many people with mortgages or loans will be understandably worried about what this means for them," Bailey said. "But if we don’t raise rates now, it could be worse later."

The Resolution Foundation, a think tank focused on issues facing low- and middle-income households, has since warned that even with the latest rate rise, the problems for borrowers are far from over.

It says current market pricing suggests that households remortgaging in 2024 are poised for an annual mortgage bill rise of approximately £3,000 or more on average.

“There’s a lot of mortgage pain coming, and much of it will arrive during the run-up to a 2024 election,” said Torsten Bell, chief executive of the Resolution Foundation.

The dire news is before we get to the next announcement on interest rates due in August with many experts predicting even more rises.