Brits on one deal could see mortgage rise by £64 a month | UK | News
The Bank of England has warned that millions of British homeowners will see their mortgage repayments rise over the next three years as they refinance at higher rates. While the average fixed-rate mortgage holders could see their monthly repayments increase by £64 when they refinance, some households have seen larger increases. Sky reports.
Variable fixed rates account for 43% of account holders in the country, or about 3.9 million homeowners. But that’s not all bad news, as payments for those with variable interest rates are expected to fall over the same time period, according to the Bank’s biannual financial stability report.
The report by the bank’s financial policy committee (FPC) also highlighted a range of pressures on UK finances, including “geopolitical tensions, the fragmentation of trade and financial markets and pressures on sovereign debt benchmarks”, but concluded that the main banks could withstand the turmoil.
Britain’s biggest lenders Barclays, HSBC, NatWest, Lloyds, Santander, Standard Charted and Nationwide have all passed stress tests implemented after the 2008 crash to assess how banks would perform in a severe recession scenario, it has been confirmed.
The bank also lowered its forecast for the level of capital reserves banks would need to maintain to protect against collapse if post-financial crisis regulations were substantially relaxed.
The lowered benchmark will be welcomed by Chancellor Rachel Reeves and will provide banks with increased confidence in using their capital and lending to UK households and businesses.
The FPC found that the country’s banking system could continue to support its economy even if economic and financial conditions deteriorated significantly.
Matt Britzman, senior equity analyst at Hargraves Lansdown, told Sky: “UK banks offer some optimism in what could be a good few weeks for major lenders.
“Even the UK’s largest banks have passed the latest stress test, reaffirming their resilience and gaining regulatory approval to relax capital buffers.
“Most banks already hold capital well above the minimum at their own discretion, so any change in strategy could take time – but in theory this would free up extra capital for lending or capital returns. But they are exercising the new freedom, another clear sign that the UK banking sector is healthy.”
