Around four million mortgage holders could see their monthly payments jump at the end of the next year as the risk of households defaulting on debt has risen, the Bank of England has said in a report.
People with a fixed-rate home loan due to expire at the end of 2023 are facing an increase in their average monthly repayments of around £250 because they will have to refinance onto a higher rate.
This could mean that costs surge by £3,000 a year for many households who are already seeing their finances stretched by increased living costs.
But the increased pressure on households is not expected to challenge the resilience of UK banks which will be well equipped to support lending, the Bank’s Financial Policy Committee said.
This is because major banks and building societies have strong balance sheets, higher profits, and have increased their provisions to support credit losses, it said.
