{"id":822294,"date":"2026-11-03T01:46:31","date_gmt":"2026-11-03T01:46:31","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/822294\/"},"modified":"2026-11-03T01:46:31","modified_gmt":"2026-11-03T01:46:31","slug":"millions-in-uk-set-for-higher-mortgage-costs-next-year-as-interest-rate-rise-imminent","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/822294\/","title":{"rendered":"Millions in UK set for higher mortgage costs next year as interest rate rise imminent"},"content":{"rendered":"\n

Households in Britain are bracing themselves as the Bank of England<\/a> is looking set to raise interest rates<\/a> – and it will mean millions of households face higher mortgage costs next year. <\/p>\n

The Monetary Policy Committee<\/a> (MPC) meet to vote on Thursday, with analysts widely set on expecting a hike from 3.75 per cent to 4 per cent – the first time the Bank would have raised rates in more than three years. <\/p>\n

And with 2.3m households in the UK set for a mortgage renewal across the course of 2027 – nearly half a million homes more than did so this year – it will mean a particularly big jump for those who secured five-year fixes in the first half of 2022, just as interest rates started to run higher in the wake of Russia’s invasion of Ukraine. <\/p>\n

At the time, interest rates were sat at around just 1 per cent, while the average two-year mortgage fix was 3.25 per cent and a five-year fix was 3.37 per cent on average, per Moneyfacts data. <\/p>\n

On a \u00a3200,000 mortgage with a 25-year term, that means monthly repayments on a five-year fix at the average rate would have gone from around \u00a3986 in 2022 to \u00a31,289 now on a like-for-like deal – more than \u00a33,600 a year more. In reality, those arranging deals five years ago will likely have paid off a chunk of the total debt, though monthly repayments are still likely to rise notably. <\/p>\n

Mortgage rates have been rising across the past few months, with the average five-year fix tipping over 6 per cent<\/a> a month ago and remains at that level at the start of November. <\/p>\n

\"Interest<\/a> Interest rates have soared since 2022 (Bank of England) <\/p>\n

However, a boost to the market will come on Tuesday, when Barclays will cut some of their residential mortgage deals. <\/p>\n

Prices across the mortgage market are typically based on swap rates – essentially future expectations of interest rate movements – rather than the base rate itself. <\/p>\n

Some market estimates are accounting for up to four hikes in total, with the yield on two-year gilts currently at 4.8 per cent. <\/p>\n

While the UK economy<\/a> is still stuttering and growing less than might be hoped, the Bank of England (BoE) faces a tricky run of decisions. Cutting rates is one tactic used to stimulate faltering economies – but presently in the UK, it is the fear of inflation which looks likely to take precedence, requiring at least one rates raise instead. <\/p>\n

Interest rates were last rising in response to the energy price shock caused by Russia’s invasion of Ukraine, across 2022 and 2023. The final hike came in August 2023 – 38 months ago – to a high point of 5.25 per cent, and since then the BoE has voted for six decreases, the last of which came just before Christmas 2025. <\/p>\n

A rise now, then, would be a boost to savers who could get a better return on their money – even while it could be problematic for those who have to renew mortgage deals in the coming months. <\/p>\n

The top easy access savings accounts currently offer 5 per cent interest, but only for limited amounts or timeframes. <\/p>\n

Barclays analysts expect a 7-2 vote in favour of a hike this time, while RSM UK’s chief economist Thomas Pugh believes it could be slightly closer at 6-3. <\/p>\n

\"Governor<\/a> Governor of the Bank of England Andrew Bailey (PA Wire) <\/p>\n

A lingering issue for households and businesses alike is that this may not be the only hike of the cycle. <\/p>\n

Barclays analysts Jack Meaning and Cian Hennigan wrote in a research release last week that they see energy inflation meaning another rise early next year. “We continue to expect a final 25bp hike in February 2027, conditional on the conflict in the Middle East not having found a lasting resolution. As discussed above, this final hike could be framed as a response to the direct energy price shock and\/or prudent risk management,” they wrote. <\/p>\n

“However, we would expect the MPC to say, either explicitly or implicitly through its commentary on the central forecast and scenarios, that further hikes would depend on seeing evidence of second-round effects beginning to build.” <\/p>\n

Energy inflation is particularly problematic because it feeds into different areas to push up prices elsewhere: transport, food production, manufacturing and household bills, for example. <\/p>\n

That could be an even greater issue for British households at this time of year. Research from European neobank Bunq reports one in four people put away less than 5 per cent of their income in a typical month as savings, but almost half (42 per cent) save less or nothing at all across the Black Friday and Christmas period. <\/p>\n

Indeed, a quarter (23 per cent) have to actively draw from their savings to fund the season and a predictable three-quarters (74 per cent) of people expect to spend more over the wider festive period. <\/p>\n

Bunq’s Joe Wilson urged households to build festive spending funds “across the rest of the year” to avoid overspending from single paydays across November and December – which is a particularly helpful habit to build while rates are higher, enabling savers to earn even more interest on their cash. <\/p>\n","protected":false},"excerpt":{"rendered":"Households in Britain are bracing themselves as the Bank of England is looking set to raise interest rates…\n","protected":false},"author":2,"featured_media":822295,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[11456,84,273,1294,4176,5555,1086,13908,5467,4377,1891,4517,4174,4769,4655,4204,4762,5556,5557,3356,5042,474,13909,56,54,55],"class_list":["post-822294","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-401k","tag-business","tag-business-news","tag-economy","tag-finance","tag-financial-information","tag-investing","tag-investment-tools","tag-investor","tag-market-news","tag-mortgage","tag-mutual-funds","tag-personal-finance","tag-quote","tag-real-estate","tag-retirement","tag-stock","tag-stock-research","tag-stock-valuation","tag-stocks","tag-suze-orman","tag-tax","tag-track-portfolio","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/822294","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=822294"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/822294\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/822295"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=822294"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=822294"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=822294"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}