Mortgage Payments to Soar for Thousands of UK Households
The Bank of England has warned that mortgage arrears have skyrocketed to a 10-year high, with the value of outstanding mortgages in arrears rising 44.5 per cent year-on-year to £21.3 billion in the first quarter. This surge in mortgage arrears is attributed to the high interest rates on repayments, which have left many households struggling to meet their monthly payments.
A steep rise in mortgage arrears is a worrying sign for the nation’s personal finances.
According to Tom Cuppello, risk director at Broadstone, “The continued increase in outstanding mortgage balances with arrears is a clear economic indicator that we are not out of the woods yet.” He notes that many households are still struggling with the cost-of-living crisis and the recent spike in mortgage rates over the past two years.
To make matters worse, people coming to the end of a five-year fix this month can expect to see their interest rates almost double, with average rates rising from 2.85 per cent to 5.5 per cent. For a mortgage with a £175,000 balance outstanding and 20 years left on the term, this would mean the difference between paying £957 and £1,204 each month.
Average mortgage rates have risen significantly, leaving many households with a hefty increase in their monthly payments.
The situation is particularly concerning for homeowners who are already struggling to make ends meet. One 79-year-old homeowner, who did not want to be named, told the BBC that he had cut back on other costs as much as he could, but was only able to pay part of his mortgage bill each month. “The anxiety is affecting my health,” he said, claiming that he had received slow responses when highlighting the issue to his lender.
Donna Draper, a relationship manager at the Nationwide Building Society, emphasized the importance of seeking help for those who are struggling to make their mortgage payments. “No-one wants to send debt collectors to your door. Nobody wants that. We want to help you, we want to get a solution in place with you. But we can only do that if you give us a call and let us know [you are struggling].”
The emotional toll of struggling to pay mortgage bills should not be underestimated.
In conclusion, the surge in mortgage arrears and the impending increase in interest rates paint a worrying picture of the nation’s personal finances. It is essential for households to take proactive steps to manage their mortgage payments and seek help when needed to avoid falling into debt.
What’s Next for Mortgage Holders?
As the mortgage market continues to evolve, it is crucial for homeowners to stay informed about the latest developments and take control of their mortgage payments. With the right support and guidance, households can navigate the challenges posed by rising interest rates and mortgage arrears.
A proactive approach to managing mortgage payments is key to avoiding debt and financial struggles.
