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Millions to face shock jump in mortgages repayments over the next two years
Despite interest rates being forecast to be cut soon, the Bank of England reckons households will soon be paying 28 per cent more each month
MORE than a third of homeowners can expect their mortgages to jump by around £180 a month over the next two years, according to the Bank of England.
The Bank’s latest report into the UK’s financial stability revealed that about three million households are on mortgage rates below 3 per cent.
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This is because their fixed home loans were taken out before interest rates started rising and are yet to expire.
Even though interest rates are forecast to be cut soon, the Bank reckons these households will soon be paying 28 per cent more each month.
This works out to an extra £2,160 a year. And about 400,000 households will be whacked with an even bigger hit of paying 50 per cent more, the Bank reckons.
More expensive housing costs have made it much harder for people to build up savings, it said.
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In better news, nearly a fifth of mortgage borrowers will see their monthly payments fall by the end of the year.
About 1.5million — 18 per cent of UK homeowners — have a variable rate mortgage which tracks the Bank interest rate.
This means that they should benefit instantly as soon as the Bank lowers the rate.
Money markets reckon there is a 50 per cent chance of the Bank cutting them to 5 per cent in September.
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Earlier this month the Bank’s ratesetters kept them at the 16-year high of 5.25 per cent for the seventh time on the bounce.
Lloyds Banking Group boss Charlie Nunn said yesterday that he expected mortgage rates to stick at a “new normal” of up to 4.5 per cent.
The chief of the UK’s biggest lender said that markets do not believe the bank rate will fall to below 3.5 per cent.
I'm mortgage-free at 22 after building a house in the Caribbean for £3k to escape the UK - I spend all day at the beach
Therefore mortgages will not fall back to their historical lows of 1.5 per cent or 2.5 per cent, he added.
Spokes too soon?
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THE boss of Halfords has ruled out spinning off its cycling division, despite the struggling division shrinking.
Wet weather, the cost of living and hefty discounting by rivals mean bike sales now make up less than 35 per cent of its business.
But boss Graham Stapleton said there were “no plans” to ditch bikes as Halfords yesterday reported an 18.3 per cent drop in profits to £36.1million.
Last year the firm rejected a £1.4billion merger with van firm Redde Northgate.
Snap poll bank risk
THE French snap election poses a risk to the UK and global financial security, the Bank of England warned yesterday.
The Bank highlighted possible turmoil in government bonds “as already observed in response to the news of French parliamentary elections over the summer”.
Emmanuel Macron’s shock decision triggered a rapid sell-off of French government bonds.
More than half the world’s population is heading to the polls this year. The Bank said uncertainty could “increase government borrowing costs”.
Sell-off of Boots revived
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THE owner of Boots has made its clearest statement to date that it has revived plans to sell the health and beauty retailer.
Boss of Walgreens Boots Alliance Tim Wentworth told analysts the company had taken “a critical look at Boots” and it would “find innovative ways for this business to fulfil its potential”.
Analysts confirmed it was business jargon for hoisting the sale sign.
It is understood that plans for a £7billion stock market listing have been paused.
Boots yesterday touted its stronger trading with shop sales rising by 3.8 per cent, helped by travel stores, while its digital sales rose by 13.8 per cent in the past three months.
Walgreens is keen to offload Boots so it can focus on fixing its problems at home,
It plans to shut a substantial number of its 8,600 US stores after profits and weak sales fell below expectations.
Rishi card win
JOKE Rishi Sunak birthday cards have become a top-seller for Moonpig.
The online greetings firm said it had sold more than 1,000 cards with the Prime Minister’s face on it during the past year.
One on the site reads: “A Birthday is like a Prime Minister . . . it’ll be gone before you know it.”
Moonpig’s sales have risen by 6.6 per cent to £341million while profits rose by almost a third to £46.4million.
Shares jumped by more than 16 per cent yesterday to 184p.
Currys' U.S. woe
THE boss of Currys blamed a recent takeover bid for undervaluing the firm as its shares tumbled yesterday.
The company’s shares dropped to 71.6p in a 5.8 per cent dip — despite it returning to the black this year after making profits of £27million.
US firm Elliott offered 67p-a-share — still lower than the shares currently are — to the electricals chain during its offer back in March.
Currys CEO Alex Baldock said: “I don’t spend time worrying about Elliott.
“I only worry about what I control.”
Shares
BARCLAYS
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HSBC
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up 22.50 to 2813.50
TESCO
down 1.10 to 306.50
LLOYDS is shutting 60 more branches.
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The high street bank has blamed falling customer use for axing 28 Lloyds sites plus 17 Halifax and 15 Bank of Scotland branches between now and next October.
It will retain 946 branches across the UK.
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