Mortgage payments to jump £500 for nearly one million households

Part of Threadneedle Street’s twice yearly Financial Stability Report, it also explained that mortgage holders “may struggle with repayments” on loans, but said lenders are strong enough to withstand a rise in customers defaulting on repayments.  

It comes just a day after mortgage rates hit their highest level in 15 years, with the average two-year fixed deal rising to 6.66% – surpassing the peak of 6.65% seen during the aftermath of Liz Truss’ mini-budget in October last year and is now the highest since the financial crisis.  

Yesterday (11 July) also saw regular pay growth hit a record-equalling high of 7.3% – equalling the highest level of growth seen last month and during the Covid-19 pandemic period between April and June 2021.  

This, according to some, has set the scene for yet another interest rate hike – matching the trend the UK has seen over the past 13 months which has seen rates go from 0.1% to five percent.

However, according to the Financial Stability Report, UK banks are resilient and “strong enough” to continue to support households and businesses through this period of higher interest rates and have large capital buffers to absorb losses.