As the Bank of England anticipates its Bank Rate decision, UK Finance reports on the current state of residential mortgages.
- The UK mortgage market holds 8.4 million outstanding residential mortgages, with most being fixed-rate deals.
- A significant chunk of these fixed-rate mortgages, around 1.8 million, are due to expire next year, influencing future market conditions.
- Current average balances and rates for various mortgage types highlight the potential financial impact of any rate changes.
- Interest rate fluctuations could directly affect monthly payments, prompting individual financial adjustments.
In light of the upcoming Bank Rate decision from the Bank of England, UK Finance has provided a snapshot of the residential mortgage market. There are currently 8,392,000 residential mortgages outstanding in the UK, with an overwhelming majority being fixed rate. This accounts for 82% of the total, equating to 6,882,000 fixed rate mortgages. Meanwhile, tracker mortgages and standard variable rate (SVR) mortgages each hold an 8% share.
An important aspect of these mortgages is their impending maturity. About 1.8 million fixed rate deals are scheduled to conclude next year. This forthcoming expiration is likely to impact the market significantly, as borrowers may seek alternative mortgage arrangements in response to shifting rates.
The average financial commitments for these mortgages provide further context. Tracker mortgages typically have a balance of £139,124 with a 6.44% interest rate, leading to an average monthly interest payment of £747. SVR mortgages generally have a £82,438 balance at a 7.01% rate, resulting in a £482 monthly interest payment. Fixed mortgages, on the other hand, are noted for having an average balance of £165,363 with an interest rate of 3.41%, culminating in a £470 monthly interest payment.
The potential changes in the Bank Rate present an interesting scenario. A decrease of 0.25% in the Bank Rate could lower monthly payments for tracker and SVR mortgages by £28.98 and £17.17, respectively. Conversely, an increase of 0.25% would see payments rise by identical amounts. Such fluctuations underscore the sensitivity of the mortgage market to base rate changes.
The upcoming Bank Rate decision by the Bank of England is poised to critically influence the UK mortgage market, affecting millions of borrowers.
