Millions of UK households will face higher mortgage payments next year, the Bank of England (BoE) has warned.
The average monthly mortgage bill will go up from £750 to £1,000 a month, the Bank’s Financial Stability Report stated.
The rising cost could cause severe financial difficulties for an additional 220,000 households, the Bank said. Businesses would be under ‘significant pressure’ owing to rising prices and borrowing costs, it added.
The BoE also warned of an increased danger of global financial risks. However, it said that households, businesses and banks were more resilient than before the global financial crisis of 2008 and the recession of the 1990s.
In a letter to the Treasury, Andrew Bailey, Governor of the BoE, said: ‘Falling real incomes, increase in mortgage costs and higher unemployment will place significant pressure on household finances and weigh on their ability to service debt.
‘There is nothing easy about the situation we face at the moment. Four million households in this country are exposed to rate rises over the next year, and that’s a very substantial number.
‘I do hope and believe that more customers will be supported through this and we won’t get the level of repossessions that went on in the past.’