An additional £1,800 a year if base rate goes up

Since there can be no doubt that the Bank of England’s (BoE) base rate will rise at some point in the future,  PricewaterhouseCoopers (PwC) has made an attempt to find out how much UK homeowners will have to pay if average mortgage interest rates returned to the levels of 2008.

The average mortgage rate was 6.3 per cent in 2008 and 4.1 per cent in the first half of the current year.

Thus, if the average rate decreases to the level of 2008, the typical homeowner will be forced to pay an additional £34 per week, which will make up nearly £1,800 annually in mortgage payments.

It makes up approximately 3.5 per cent of the total household spending of the 10 million UK households who have mortgages or about £18 billion annually.

John Hawksworth, of PwC, says that the financial pressure on household budgets would be one more factor along with future tax rises and public spending cuts which will bring about the slowdown in market activity.

 


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