Building Societies Association comments on the Bank Rate increase

Andrew Gall, Head of Savings and Economics, Building Societies Association (BSA), comments on the Bank Rate increase from 5.0% to 5.25%.

“Whilst we have seen a small drop in inflation last month, family finances continue to be under pressure.

“The further rise in Bank Rate, and the suggestion that rates will remain elevated for some time, will be unwelcome news for many borrowers.

“The 1.8 million households coming to the end of their fixed-rate mortgage this year will still see a significant increase in their new mortgage payments.

“On average this will be around £247* a month for those coming to the end of a two-year deal.

“Whilst arrears levels still remain low, forecasts for wider economic indicators suggest payment difficulties may start to tick up.

“Lenders are conscious that each mortgage in arrears is a real worry for the individual or family affected and have experienced teams, with a wide range of options, ready to offer practical, tailored support to anyone who is worried about meeting their future mortgage payments. 

“Many of these options were outlined in the recent Mortgage Charter.

“Whilst the Charter is only available to those currently up to date with their payments, borrowers who are in arrears will already be receiving tailored support from their lender.”

* Based on a £130k mortgage for 25yr term. It compares the rate on the loan 2 years ago to the one available now (based on the latest data – June 2023) on the same basis i.e. assumes 2yr fixed will re-mortgage onto another 2yr fixed at the same LTV and for the same £130k.

Kindly shared by Building Societies Association (BSA)

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