UK Homeowners Face Painful Mortgage Payment Hikes
Homeowners in the UK are facing higher mortgage costs due to a global bond market selloff, which has pushed borrowing rates up. This increase is affecting borrowers whose fixed-rate deals are expiring, with some seeing monthly payments rise by hundreds of pounds.
The Bank of England estimates that nearly 750,000 borrowers will face an average monthly repayment increase of £170 when their older fixed-rate deals expire in 2026. By the end of 2028, over five million households could see their mortgage repayments rise.
The selloff in global bond markets has driven government borrowing costs to multi-year highs, with the UK's 30-year government bond yield crossing 6% for the first time since 1998. Higher bond yields can increase lenders' funding costs, which may be passed on to borrowers through mortgage rates.
The conflict in Iran has added to inflation concerns and weakened expectations of interest-rate cuts, making mortgages more expensive for households and increasing pressure on lenders.