Bank of England warns of mortgage agony, says monthly costs could jump £500 for some

In the BOE's Financial Stability Report, the central bank said its model shows that over 2 million mortgage holders will see monthly payments increase between £200 to £499 by the end of 2026.

Suburban residential properties and distant city high-rises in Ruskin Park, a public green space in Lambeth, on 11th June 2023, in London, England.The Bank of England warned already struggling homeowners could see monthly mortgage repayments rise sharply in the coming months, but stressed households today are not nearly as indebted as they were in the run-up to the global financial crisis.and higher interest rates as their fixed-rate mortgage deals expire.

The central bank's report comes shortly after the U.K.'s average 2-year fixed mortgage rate rose to its highest level since 2008, deepening fears of an impendingThe average rate of a two-year fixed deal rose to 6.70% on Wednesday, according to figures from data provider Moneyfacts. This key mortgage rate came in at 6.66% on Tuesday,The average five-year mortgage rate rose to 6.20% on Wednesday, Moneyfacts said, a modest increase from Tuesday but still some way off the 6.

It comes as the BOE battles stubbornly high inflation, with Governor Andrew Bailey reportedly saying on Monday that the central must "further interest rate hikes are inevitable in the coming months.

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