The imminent increase in interest rates implies that individuals intending to refinance their homes will face an average yearly cost hike of £2,900 starting in 2024, as per a declaration by a research group.
The Resolution Foundation anticipates that the standard two-year fixed-rate mortgage will reach 6.25% before the year’s end, putting the UK into a “mortgage crunch”.
The organization estimates that approximately 800,000 individuals are likely to refinance their homes next year.
In response to these projections, a Treasury representative assured that they have “customized assistance” ready for homeowners struggling to keep up with their repayments.
Homeowners are currently grappling with substantial increases as financial institutions have escalated their rates over the last two weeks.
A rise in interest rates by the Bank of England is anticipated for the following week.
Jeremy Hunt, the Chancellor, affirmed earlier this week that the Bank has “no other option” than to increase rates in its efforts to control inflation and limit the escalation of prices.
At present, the Bank of England’s base rate stands at 4.5%, but the Resolution Foundation predicts it will climb to nearly 6% by the middle of 2024.
These forecasts have rapidly impacted the mortgage market, with existing deals being pulled and replaced with options featuring elevated rates.
On the previous Friday, financial information company Moneyfacts reported that the average two-year fixed-rate loan for homeowners was at 5.98%, a considerable rise from the 3.14% observed a year ago.
