Mortgage holders face paying £3,000 more in repayments in 2024 as rising interest rates deliver a £17billion blow to homeowners.
The Resolution Foundation has calculated that those coming off their fixed mortgage deals will be left to refix with much worse rates by the time of the general election next year.
More than 2.4 million fixed-deal mortgages are set to expire from now up until the end of 2024.
Millions of households are facing higher mortgage payments, with many paying the biggest proportion of their income on mortgages since before the financial crisis, the think tank found.
The Foundation estimated that 90 percent of mortgage holders refixing next year will see that their annual average repayments have risen by £3,000.
Kundan Bhaduri, property developer at The Kushman Group said: “In the face of relentlessly rising two-year fixed rates, the agony of UK homeowners and landlords has now reached fever pitch.
“These rates have now surged to a 15-year high, leaving families and small investors struggling to make ends meet and prospective buyers wary of entering the housing market.”
Right now, the financial markets are predicting that the Base Rate may peak at around 5.75 percent, in early 2024 which could continue to push up rates.
The jump in borrowing costs will mean that the average household with a mortgage will be spending 16 percent of their total income on their housing loan in 2025, the highest proportion since 2008.
Adam Corlett, principal economist at the Resolution Foundation, said: “The worst of the cost-of-living crisis may be behind us, but except for those with significant savings, it is stagnant living standards rather than boomtime Britain that the future has in store.”
The think tank predicted that the UK’s poorest households would suffer from another year of falling real incomes as Government benefits to help with the cost-of-living crisis end and the tax burden rises.
Inflation and interest rate rises from the Bank of England are both contributing to the increase, which will put a further squeeze on many families’ finances.
Mr Bhaduri added: “For the average Briton, the beacon of hope lies in the two-year SWAP rate, a critical gauge that could dictate the fate of the property market. Should it drop below five percent, it could breathe life back into a market teetering on the edge.”
