Despite the ongoing cost of living crisis the Bank of England (BoE) has said that it expects the number of homeowners struggling to repay their mortgage to remain broadly level.
In its latest Financial Stability Report the Bank said the impact of higher interest rates on mortgages is less than in the past because an increasing share of mortgage debt is at fixed rates.
As of 2022 Q1, 80% of the outstanding value of residential mortgages was at a fixed rate, compared with 55% five years ago.
But with 40% of fixed rate mortgage deals set to expire this year and next and borrowers will still be facing the prospect of both increased rates and repayments.
However, the BoE anticipates that the financial support on offer to households by both the Government and lenders should be enough to shield them from serious trouble.
Overall the BoE estimates that the proportion of households at high risk of falling behind will hit 1.8% by the end of the year.
Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown, said: “If the financial resilience of the UK could be summed up in a few words, ‘it could be worse’ would do the trick.
“That appears to be the overall verdict of the Bank of England’s report into the financial stability of the UK. Although the war in Ukraine has led to a deterioration in the global economic outlook and households and businesses could still be vulnerable to further shocks, the situation isn’t as quite as bad as previous crises.
“Consumers might be coping with the biggest hikes in prices in four decades but compared to the months before the 2008 financial crisis hit, households aren’t as likely to dig themselves deeper into more debt.
“The escalating cost-of-living crisis is so stark that the government has alreadyy moved to pledge more support to those on lower incomes facing sky high energy bills.”
Separately the HL Savings and Resilience Barometer produced with Oxford Economics and published today showed that the effect of these payments will essentially be to offset the rises in energy prices expected in October.
