The Resolution Foundation warned 1.5million mortgage holders face an average rise in annual bills of £1,800 in the coming 12 months.
Although the future is looking brighter with falling inflation, interest rate cuts and changes to tax, only the richest will benefit from the differences.
The Foundation claimed the changes are set to leave the richest half of Britons better off in 2024, while poorer people suffer a further income pinch.
Mortgage repayments will continue to be high for over 1 million families in 2024 as interest rates are still expected to remain above pre-pandemic levels.
The Bank raised interest rates 14 consecutive times in a bid to tame high inflation and hit the Government’s two percent target.
The base rate has been at 5.25 percent over the last three months which gave hope to many homeowners, hoping to see cheaper mortgage deals.
Analysts are confident that rates will be cut in 2024 but not until the later part of the year which means sizable increases to mortgage repayments are coming.
As Britain faces a General Election year, the foundation said 2024 will mark the first time ever British households have been poorer at the end of a parliament than at its start.
The think-tank calculated that higher interest rates had left households better off in 2023. Hikes resulted in “higher returns on savings [which] outweighed higher mortgage bills”, raising household incomes by £19billion, it said.
This £19billion net interest income boost amounts to one percent of households’ disposable income
However, Torsten Bell, the managing director of the Resolution Foundation, warned that the country’s cost of living woes will likely be continuing. The economist explained: “2024 is going to be messy, for our living standards not just politics.
“The past two years have been dominated by rising energy and food bills, with everyone affected. It will be very different in 2024. Inflation falling back faster than expected means many will benefit from rising real wages.
“But politicians tempted to claim happy days have arrived should be cautious – it won’t feel like that for everyone.”
The Bank, which raised its main policy rate 14 consecutive times between December 2021 and August this year to the current 15-year high of 5.25 percent, said that, because most mortgages taken out over recent years had been at a fixed interest rate, higher interest rates tended to have a lagged effect on households with a mortgage.
It said that around 55 percent of mortgage borrower accounts, around five million, had repriced since interest rates began to rise in late 2021.
But it warned: “Higher rates are expected to affect around five million [further] households by 2026.
“For the typical owner-occupier mortgagor rolling off a fixed rate between [April to June] 2023 and the end of 2026, their monthly mortgage repayments are projected to increase by around £240, or around 39 percent.
“As higher mortgage rates continue to flow through to UK households, the average debt servicing burden will increase.”
