Bank of England Warns of Further Impact of Higher Rates

Five million households face significant mortgage bill increase by 2026, while commercial property sector experiences growing risks.

Five million UK households face an extra £240 monthly increase in mortgage bills by 2026 due to the end of cheap fixed-rate loans, according to the Bank of England.
The Bank's base rate now stands at 5.25%, up from 0.1% two years ago, and households are expected to spend around 9% of their incomes on servicing mortgage debt by 2026, up from 6% before the rate rises.
Despite the increase, the Bank's Financial Policy Committee is less worried than earlier in the year as mortgage rates have started to fall and pay is rising faster than expected.
The Bank warns that the full effect of higher interest rates has yet to come through, posing ongoing challenges to households, businesses, and governments.
Risks are growing in the commercial property sector due to home working and the demands of net zero, putting downward pressure on prices and making refinancing challenging.