The number of UK homeowners expected to face higher mortgage repayments has increased after global tensions, including the Iran conflict, changed economic forecasts. The Bank of England now estimates that more than five million homeowners will see their monthly mortgage costs rise by the end of 2028.
This latest forecast is higher than the four million homeowners predicted in December. Although more people are expected to pay higher mortgage bills, the increase is likely to be smaller than the sharp rises many borrowers experienced over the past few years.
Monthly Mortgage Bills Continue to Rise
However, some homeowners will feel a much greater financial impact. Around 750,000 borrowers currently paying interest rates below 3% are expected to refinance this year. These homeowners could see their monthly repayments rise by an average of £170.
Homeowners Prepare for Higher Living Costs
Many homeowners are already adjusting their budgets as they prepare for higher mortgage payments.
She explained that the additional cost means she must reduce spending in other areas and manage her finances more carefully.
She added that while she expected some increase after her low fixed rate ended, the size of the jump was still concerning. She also said maintaining the same lifestyle would become difficult unless salaries increased at a similar pace.
Fixed Rate Borrowers Face Changing Outlook
More than 80% of UK mortgage holders have fixed rate deals. These mortgages keep the same interest rate for a set period, usually two or five years. Once the fixed term expires, borrowers must choose a new mortgage deal based on current market rates.
Even so, borrowers should not expect mortgage costs to fall in the coming years. Before the Iran conflict, economists believed repayments would gradually decrease. Updated forecasts now suggest that lower mortgage costs are much less likely.
Economic Uncertainty Keeps Pressure on Borrowers
The latest projections show that international events continue to influence the UK’s financial outlook. Financial experts advise borrowers to review their mortgage options early, monitor interest rate changes, and prepare household budgets before fixed rate deals expire.
