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BoE: 4.4m to refinance onto higher rates: "There could be big problems for borrowers in no growth Britain next year"

ended 29. November 2024

In its Financial Stability Report, the Bank of England says that between December 2024 and 2027 Q4, around 50% of mortgage accounts (4.4 million) are expected to refinance onto higher rates. Of these, 2.7 million (31% of all mortgages) are expected to refinance onto a rate above 3% for the first time and roughly 420,000 (5% of all mortgages) will see payments increase by more than £500 per month. For other borrowers, previous and expected falls in Bank Rate will lead to decreasing mortgage payments. 27% (2.4 million) of mortgage accounts are expected to see monthly payments decrease between December 2024 and 2027 Q4. 1.7 million (19% of all mortgages) of these are on variable rates, while the remaining 800,000 are currently fixed above prevailing rates. Newspage asked brokers for their views on this and whether those households refinancing onto higher rates will be able to cope. Their thoughts are below.

9 responses from the Newspage community

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Riz Malik
Independent Financial Adviser at R3 Wealth
The end of the year is a key date for mortgage renewals and more households will find their payments increasing when they renegotiate their deals. The mortgage pain may have started with Liz Truss and Kwasi Kwarteng but Keir and Rachel are certainly not doing anything to help following the Budget. If unemployment starts ticking up, things could deteriorate fast. There could be big problems for borrowers in no-growth Britain next year.
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Michelle Lawson
Director at Lawson Financial
The Liz Truss legacy still rambles on while Wreck-It Reeves has exacerbated the situation further. Households are now being burdened with ever greater mortgage costs and expenses. People only have so much in the kitty to do everything with. It is a shame the Government, along with the Treasury, can't get a handle on their own Budgets in the same way that they are expecting households to. The country is at breaking point and something has to give.
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Emma Jones
Managing Director at Whenthebanksaysno.co.uk
So many borrowers rolling onto higher rates has the potential to cause a lot of pain next year. Before the Budget mortgage rates had been falling for a number of months as markets were expecting two rate cuts this year and the pressure was being alleviated slightly. But the Budget changed everything. With the Budget seen as inflationary, rates are now likely to stay higher for longer, which will put further pressure on borrowers in 2025.
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Daniel Hobbs
CEO at New Leaf Distribution
Following the Budget, 2025 is shaping up to be a far harder year than it was just six weeks ago. The Budget has changed mortgage market sentiment considerably and seen mortgage rates rise. During November, much of the momentum in the mortgage market went and people are now digesting the impact of the Budget on their finances.
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Rohit Kohli
Director at The Mortgage Stop
While the powers that be are busy celebrating base rate cuts, the Bank of England’s report paints a stark picture of persistent financial pressures. With 4.4 million borrowers set to refinance onto higher rates, and many facing significant payment hikes, the cost-of-living crisis is far from over. Now more than ever, it’s vital for borrowers to explore their options and seek expert advice to secure the right solution. There’s still a long road ahead, and making informed decisions will be key to navigating these challenges.
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Simon Bridgland
Broker at Charwin Private Clients
With 4.4million household budgets in the crosshairs, the lenders approach to the inevitable fall out from the very real and significant problems borrowers will face will be key to these borrowers ability to stay afloat. Those with deals ending over the next few years need to be proactive in keeping spending to a minimum whilst at the same time paying down other personal debt. Many will sadly feel the agony of arrears and suffer the longer term repercussions they entail. I would expect some to try and downsize as existing mortgages become unaffordable.
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Elliott Culley
Director at Switch Mortgage Finance
It has felt like rates have been higher for an eternity, but actually there are still borrowers in the UK yet to be affected as they locked into 5-year fixed rates before the fallout began. They will be praying rates fall before their mortgage is up for renewal to cushion the inevitable increase as much as possible. Borrowers have shown amazing resilience over the past two years, but the likelihood of increased taxes and a smaller chance of wage increases in the private sector is going to keep the pressure on.
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Newspage Admin
Founder at Newspage
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Patricia McGirr
Founder at Repossession Rescue Network
A financial tsunami is on the way for millions of households. The first wave of price increases, fuel costs, and inflation have already pushed many to the brink. Now a forthcoming ‘rate shock’ will test family budgets like never before. For many, an extra £500 a month is the tipping point between just staying afloat and going under. Borrowers need proactive advice now. Waiting until the refinancing wave hits is too late. Lenders must step up with flexible solutions, or we’ll see rising arrears and a knock-on effect across the economy. The focus shouldn’t just be on coping, but on safeguarding financial stability for millions.