Mortgage lenders ‘ready to support customers’ as rates jump again

Sign up to our free money newsletter for investment analysis and expert advice to help you build wealth Sign up to our free money email for help building your wealth Sign up to our free money email for help building your wealth SIGN UP I would like to be emailed about offers, events and updates from The Independent. “Importantly, the level of homeowners in arrears remains low, meaning that most households are able to keep up with their monthly payments.” While fixed-rate mortgage borrowers will not see an immediate change in their monthly payments as a result of Thursday’s base rate hike, around 2.4 million fixed-rate deals are due to end between now and the end of 2024. Consumers looking to remortgage may find it difficult to afford higher interest rates, so seeking independent advice is essential Rachel Springall, Moneyfactscompare.co.uk Rachel Springall, a finance expert at Moneyfactscompare.co.uk, said: “Amid a cost-of-living crisis, rising interest rates can have a devastating impact on borrowers who are already struggling to cover their monthly essentials and could well lead to a rise of ‘mortgage prisoners’. “Consumers looking to remortgage may find it difficult to afford higher interest rates, so seeking independent advice is essential to consider every option available to them, such as downsizing.” Speaking at a press conference in July last year, Sir Jon Cunliffe, the Bank of England’s deputy governor, financial stability, said: “I think I’d say the proportion of households who could get into real stress on their repayments, it’s normally when repayments are about 40% of your income, is a number we always watch very carefully and we always look to see what interest rate increases will be needed to take that share back to historically high levels, levels we’ve seen in the past, 2.7% was the highest we saw before the financial crisis.” He said back in 2022: “Of course, there’s great uncertainty about what will happen… but as it stands now, on the basis of the Monetary Policy Committee’s forecasts on market interest rates, we don’t see that share rising that much this year. That’s about debt distress…” Asked what level the bank rate would have to reach for debt servicing ratios or mortgage debt to return to pre-financial crisis levels, he said previously: “I think the market’s got interest rates going to nigh-on 3%, you’d be looking at five to seven to eight on the corporate side.