Editor's note: This brief was summarised by The Property AI Newsroom from a report by Property Industry Eye. Read the original article for full details.

Bank of England Warns of Mortgage Payment Shock for Millions

More than five million UK households are now expected to face higher mortgage repayments when they refinance over the next two years, according to the Bank of England’s latest Financial Stability Report. The Bank’s updated estimate is an increase from its previous projection of nearly four million households published in December.

The Bank of England attributes this rise to higher mortgage rates, which have followed increased market interest rates linked to the conflict in the Middle East. The average rate on a two-year fixed 90% loan-to-value mortgage has increased to 5.32%, which is around 75 basis points higher than at the time of the Bank’s December report.

According to the Bank, around 750,000 households due to refinance by the end of this year after taking out mortgages before 2022 are expected to experience the largest increases in repayments. Many of these households are coming to the end of fixed-rate mortgage deals that were secured when borrowing costs were below 3%, leaving them facing significantly higher monthly repayments when they refinance.

The Bank’s report notes that lenders are continuing to adjust mortgage pricing in response to changes in wholesale funding costs and market expectations for interest rates. Despite the increase in refinancing costs for many borrowers, the Bank said the UK financial system remains resilient overall.

Elsewhere in its Financial Stability Report, the Bank of England highlighted potential risks to global financial markets, including increased borrowing by hedge funds to invest in artificial intelligence-related stocks. The Bank also outlined proposals to reduce some regulatory requirements for the UK’s largest lenders, aiming to increase their capacity to support households and businesses while maintaining the resilience of the UK banking system.

These developments are particularly relevant for letting agents and inventory clerks, as higher mortgage repayments may impact landlords’ costs and the wider rental market.