Homeowners face the biggest increase in mortgage costs since 2008.
Mortgage costs have been climbing relentlessly since the beginning of the year.
Homeowners face the largest increase in mortgage costs since the financial crisis, and the amount of interest they pay will increase by 13% in 2023, suggests data from the government’s independent forecasting unit.
Politicians and analysts seized on a “buried” table in a report released by the Office of Budget Responsibility (OBR) alongside the budget, which claimed that mortgage costs were scheduled for their biggest increase since at least 2008.
The Liberal Democrats said the data indicated that homeowners with an average mortgage of £211,000 could see their payments increase by more than £500 a year, while investment firm AJ Bell said some people with larger mortgages could having to pay more than £1,000 extra per year.
Interest rates are at a record low of 0.1%. but financial markets have calculated a rate hike when the Bank of England meets next week, which could raise the base rate to 0.25% and then an increase of 0.25 points in December. With two more hikes of 0.25% forecast for next year, that could bring the base rate to 1% by the end of 2022.
Banks and mortgage lenders have already begun to pull their cheapest mortgage offers off the market, and some brokers have said that price changes have come “rapidly and rapidly” over the past few days.
OBR’s figures for projected year-over-year growth in mortgage interest payments, included in one of the supplemental tables to the main report, suggest that homeowners should prepare for a 5.6% increase in costs next year, rising to 13% in 2023, before falling back to 5.4% in 2024.
The 13% figure is by far the highest in the table, dating to 2008 and looking toward 2026. By comparison, an average drop in mortgage interest costs is expected this year of 2.5%, according to OBR data.
While the table did not show details on exactly what these increases in pounds and pence meant, this did not stop commenters from getting the calculators to determine how households might be affected.
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