'The fear is that the situation could deteriorate from here'
Even more pressure is set to be piled onto homeowners this week after the news that inflation in the UK has remained at a 'historically high level'. Despite experts predicting a decline, it has been announced today that inflation stayed stuck at 8.7 percent in May - the same rate it was at in April.
According to figures from trade association UK Finance, a 0.25 percent increase in the base rate could add £23.71 to the average monthly tracker mortgage payment, while a 0.5 percent increase could add £47.43. There were 4,498 residential mortgage products available on Wednesday - which is down from a total of 4,641 on Tuesday, Moneyfacts said.
"As the cost-of-living crisis gets overtaken by a cost-of-borrowing crisis, mortgages have taken the lead as the biggest personal finance concern of the moment. “However, with inflation so sticky there are likely to be calls for a more aggressive hike of 50 bps – something needed if the Bank of England is serious about bringing inflation closer to its target of 2 percent."
She said that with the “full force” of mortgage rate rises so far only hitting first-time buyers or those whose fixed-rate deals have expired in the past year or so, “the crunch point will come as more people emerge from two, three and five-year fixed rate deals over the next few months and years.”
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