A couple say they might be forced to consider selling up and renting over their soaring monthly mortgage repayments. Mark Pepperell said he was expecting to pay in the region of £150 a month extra as he searched around for a new deal.
But as interest rates climb towards six per cent, he's now been hit by a £250 per month increase. "It's a hard pill to swallow," he said. "We're comfortable, putting money back into restaurants or retail.
"But those things are going to have to stop. We will now have to take serious decisions on where our money goes." Mr Pepperell added that in two years, if rates stand at six or seven per cent, they may even have to consider selling up and renting instead.
He spoke out as a Tory former secretary to the Treasury said the Government has caused a 'crisis' - but 'the pain is still to come'. David Gauke told the BBC: "Now we have what can only be described as a crisis, and it is directly as a consequence of decisions made by the Conservative Government.
"The pain is still to come, in truth. The pain of higher interest rates, of tougher decisions on public spending is yet to be felt," added the 50-year-old, who was the MP for South West Hertfordshire from 2005 to 2019.
With some analysts predicting the Bank of England's base rate, currently standing at 2.25 per cent, will have to rise to as high as 6 per cent next year, some lenders began withdrawing mortgage products amid the uncertainty.
Major mortgage lenders Santander and HSBC, along with the Nationwide and Yorkshire building societies, joined a rush of lenders to pull home loans or up their rates, reports The Mirror.
The situation was triggered by Chancellor, Kwasi Kwarteng, on Friday when he unveiled a massive £45 billion of tax cuts funded by Government borrowing.
Huw Pill, the Bank of England's chief economist, said: "We don’t know what the future holds. Not for the next few weeks, not for the next few days – or even perhaps not for the next few hours.”
The Bank of England should consider holding an emergency meeting and look to act 'promptly and forcefully' on interest rates to head off the threat of a further run on the pound, its former deputy governor has warned.
With his fixed-rate mortgage deal ending this month, Birmingham resident Mr Pepperell knew he would have to pay more but delayed a decision so he could shop around for the best deal.
He was expecting to pay £150 more a month but said every time he spoke to his mortgage adviser, he found fewer deals were available. He has now locked in a new deal for two years at £250 more per month than he and partner, Deanna, were previously paying.
Mr Pepperall works for a sports brand and Deanna is in retail.
Meanwhile, sales assistant Robin Price, 38, has spent years saving for a mortgage deposit and, thanks to that pot and an inheritance, is now ready to buy. But with the threat of a sharp rise in interest rates looming, he said he now feels completely lost.
He fears the monthly mortgage repayments will become unaffordable.
Robin, on the minimum wage, said: "I just want a home. I can't find anywhere that I can afford a mortgage on in London or Essex because I don't earn enough."
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