Is the UK on the edge of a mortgage market meltdown? | Business

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Soaring mortgage costs in Britain are fuelling fears among homeowners, investors, charities and policymakers about the growing strain placed on borrowers. | News24_Business

A 50 bps rise in the Bank of England base rate to 5% on Thursday, twice the expected 25 bps rise and the 13th hike in a row, is likely to test that confidence, however, especially as consumers are already struggling with stubbornly high prices for food, fuel and essential services.

A run of data showing stickier-than-expected UK inflation has led markets to bet that BoE rates will stay higher and for longer. This has been reflected in swap markets. Of around 9 million outstanding residential mortgages, 800,000 are due to come off fixed-rate deals in the second half of 2023, data from trade industry group UK Finance shows. A further 1.6 million households will come off fixed rates in 2024.

There are signs cash-strapped Britons are turning to higher cost, unsecured credit to make ends meet, with 343.8 million credit card transactions recorded in March - 4.9% higher than in March 2022, UK Finance data showed. Hunt has said the government will not offer significant financial help and that mortgage lenders must live up to their commitments to help borrowers struggling with higher interest rates.

 

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