Millions Face Higher Mortgage Repayments as UK Interest Rates Rise

The Bank of England has released new figures showing that mortgage repayments are set to rise for millions of homeowners in the UK. According to data, almost 1.8 million mortgage deals are expected to expire this year, leaving many borrowers at risk of higher monthly payments.

The average effective interest rate on new mortgages increased from 4.22% in May to 4.35% in June, while the average two-year fixed mortgage has reached approximately 5.59%, and the typical five-year deal stands at 5.61%.

Sam Twyford, marketing director and credit expert at Checkmyfile, warned that moving from a fixed rate of 2% to one around 5 or 6% could add hundreds of pounds to a homeowner's monthly outgoings.

The Bank estimates that just over five million homeowners are expected to face higher mortgage repayments by the end of 2028, with an average increase of £45 per month for those leaving fixed-rate deals. However, some borrowers may see their payments rise by as much as £170 a month.