Over 1.4mln mortgages could face price rises of up to £47 per month following an anticipated rise in UK base interest rates on Thursday.
Some 639,000 and 773,000 tracker and standard variable rate deals respectively will see prices hiked, representing 17% of the UK’s 8.5mln outstanding residential mortgages.
Monthly mortgage payments could rise as much as £47.43 per month on average for those on tracker deals if the Bank of England (BoE) opts to raise rates by 0.5% on Thursday, Banking industry body UK Finance said on Wednesday.
Standard variable rate mortgage holders would face a £30.28 rise in monthly bills from a 50-basis point hike meanwhile.
Wednesday’s consumer price index reading from the Office for National Statistics showed UK inflation had remained flat between May and June at 8.7% - above analysts' expectations.
As a result, the city has the BoE’s monetary policy committee tipped to implement a 0.5% rise during Thursday’s base interest rate call, rather than an originally anticipated 0.25% hike.
“8.7% is a bad number,” Mazars economist George Lagarias commented, “there’s no way to sugar coat this”.
“This number will compel policymakers […] to further clamp down on consumption,” he added, with the market now factoring in a 95% chance of an interest rate hike from 4.5% to 5%.
If rates do see a 0.25% lift, tracker mortgage holders would face an additional £23.71 in monthly charges, with the figure sitting at £15.14 for those on standard variable tariffs, UK Finance added.
The bulk of UK mortgage holders are on fixed rates meanwhile so will be spared from any immediate effects of a base rate hike, instead facing increases when coming to remortgage in the future.