CultureMortgage defaults jump at fastest rate since 2009

Mortgage defaults jump at fastest rate since 2009

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Mortgage payments reach the highest level since the 2008 financial crisis for those on a two-year fixed deal 

Millions of households are under great financial pressure as the Bank of England increases interest rates in efforts to lower high inflation. 

Mortgage repayments have been affected as rates on two-year fixed deals rise to levels not seen since the financial crash.

The Bank of England (BOE) recently released a financial stability report stating “In the UK, more households are being affected by higher interest rates as fixed-rate mortgage deals expire. The proportion of households with high debt service ratios, after accounting for the higher cost of living, has increased and is expected to continue to do so through 2023. But it is projected to remain some way below the historic peak reached in 2007” 

The BOE projects rates to remain below rates reached in 2007 hoping to lower speculation around mortgage rates. 

The report also states millions of homeowners on new mortgage contracts in the forthcoming years will pay approximately £220 extra per month, which some label a drastic increase that is unaffordable. 

Source: Moneyfacts. Last update: 12 Jul 2023

“Which comes first the economy or the individual?”

Financial journalist Martin Lewis on Good Morning Britain argues mortgage repayments are bound to rise as increased interest rates are “one of the core ways to fight inflation”.

He states this is a “huge bill shock” to millions of homeowners affected as questioning what the government must prioritise, “the economy or the individual”.

Although many speculate that mortgage rates will come down, Lewis suggests there is no guarantee rates will drop back to normal. People may only say so “only and if” rates did come down. 

For future homeowners, concerns grow as they question if they can afford mortgages where renting seems to be a better option. 

Sharon Adebola
Sharon Adebola
Sharon Adebola content creator for the TCS Network. Sharon is a polymath and advocate for amplifying young voices in the political field. Being on numerous news platforms such s Sky and BBC News have invigorated her passion to be a voice for the voiceless and represent the concerns of her community. Two/thirds into her Politics degree, Sharon is keen to relay the political literacy she has gained to a plethora of individuals. Apart from that she is a Young Leader for the political charity My Life My Say and the President of King’s Gospel Society.

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