Mortgagors currently on fixed rates set to expire by the end of 2023 are facing average monthly repayment increases of around £250 upon refinancing to a new fixed rate, the Bank of England has warned.
For an average household, this would see their monthly payments increase from £750 to £1,000.
That equates to around 17% of their average pre-tax income, up from 12% at the end of June.
Around 30% of UK households have an owner-occupier mortgage, which is around eight and a half million households.
And around 20% of owner-occupier mortgagors (or 1.7 million households) are on variable rate mortgages, which have interest rates that change with Bank Rate.
These households are already experiencing higher mortgage costs but the share of those on a variable rate is significantly smaller than it was before the 2008 and early 1990s recessions.
At present, the impact on repayments for households currently on, or refinancing onto variable rates, is smaller than it is for those refinancing onto new fixed-rate mortgages.
In total, around half of owner-occupier mortgages (around four million) will be exposed to rate rises over the next year.
This number includes those on variable rates, and those coming to the end of fixed-rate products during this period.
Around a third of mortgagors, or 2.7 million households, are expected to face increases in monthly repayments of over £100 by end-2023, and around half by end-2025.
