Last month’s higher-than-expected 8.7% inflation number for April sparked fears that the Bank of England will continue to raise rates, currently at 4.5%, which has caused lenders to pull and reprice hundreds of home loans, the thinktank outlines.
Markets are pricing in base rates that rise to 5.5% by the end of the year, and remain ‘higher for longer’ after core inflation –stripping out house prices — hit a 31-year high in April.
The research group adds that as the central bank is “now more likely to raise rates even higher than previously thought”, it expects the two-year 75% loan-to-value mortgage rate to hit an average of 5.1% in 2023 and 4.6% in 2024.
Mortgage holders looking to renegotiate their deals over the next two years “will face a hefty £8.7bn increase in their payments as a direct result of tighter monetary policy”, the body says.
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Source: www.mortgagefinancegazette.com
ENB
Sandstone Group
