Homeowners with £300,000 mortgage could see annual payments rise by £13,200 by end of year

15 June 2023, 00:30

It comes amid predictions that the Bank of England’s interest rate could hit 6 per cent
It comes amid predictions that the Bank of England’s interest rate could hit 6 per cent. Picture: Getty/Bank of England
Kieran Kelly

By Kieran Kelly

Homeowners with a £300,000 mortgage face an annual increase of £13,200 in mortgage payments by the end of 2023, new analysis shows.

Mortgage lenders have been raising their rates - with some even withdrawing entire deals - as more predictions come in that the Bank of England could hike interest rates to six per cent by the end of the year.

On Tuesday, HSBC withdrew one of its mortgage offers from the market - the second time the banking giant has done so in a week, with subsequent deals offering higher rates.

Meanwhile, Coventry building society said it plans to suspend residential and buy-to-let deals.

Listen and subscribe to Unprecedented: Inside Downing Street on Global Player

It comes amid warnings from the Chancellor Jeremy Hunt that interest rates must rise if it means bringing down inflation, suggesting.

There is "no alternative", Mr Hunt said.

He added that the government would support the Bank of England in doing what is needed to tame inflation, which is the "number one challenge" facing the UK.

Chancellor Jeremy Hunt
Chancellor Jeremy Hunt. Picture: Getty

Mr Hunt said: "We understand there is real pressure on families with mortgages, on businesses with loans, as interest rates go up.

"In the end there is no alternative to bringing down inflation if we want to see consumers spending, if we want to see businesses investing, if we want to see long-term growth and prosperity."

Read More: Inflation in UK to be highest in developed world this year, OECD says

Read More: 'No one got hurt': UK’s reaction to Liz Truss’ premiership was 'a bit hysterical', former Bank of England governor says

Interest rate rises
Interest rate rises. Picture: Bank of England

Another interest rate rise by the Bank of England is expected, with the figure currently standing at 4.5 per cent.

Research by broker broker L&C Mortgages shows that rate rises have already added £9,564 a year for homeowners with a standard variable rate mortgage of £300,000.

Increasing interest rates to six per cent would mean homeowners with a SVR mortgage of £300,000 face paying an extra £1,103 a month compared to 18 months ago.

Lord Mervyn King says it ‘may not be compatible’ to both halve inflation & avoid recession.

It comes after the former Governor of the Bank of England Mervyn King told LBC that the "stickier that inflation seems to be", central banks - including the Bank of England - may be forced into taking "tougher action" to bring it back down.

As for how Rishi Sunak, who has promised to halve inflation in his five pledges, can take credit for falling inflation, Mr King said "it's convenient" but "not a bad thing to claim credit for" if there is confidence it will drop.

"I think it's going to be probably not wise to do so," Mr King told Andrew.

"If you think that the high energy and food prices of last year are going to drop out of the measure of inflation...it's convenient - it's something that happens.

"But if you are confident it will happen, it's not a bad thing to claim credit for when it's actually got nothing to do with you at all."

Read More: Increase productivity and taxes may be cut, Hunt urges public sector - after Boris' jibe to 'be more Conservative'

Mr King also warned that it may not be "compatible" to halve inflation and avoid a recession.

Mr Hunt has already signalled that he would be comfortable seeing the UK enter a recession if it meant bringing down inflation.

More Latest News

See more More Latest News

President Joe Biden

Joe Biden insists he will stay in race, as president's family 'discuss exit plan from election campaign'

A burnt out car in the Leeds suburb of Harehills, after vehicles were set on fire and a police car was overturned as residents were warned to stay home following an outbreak of disorder on Thursday evening. Picture date: Friday July 19, 2024.

Council to hold 'urgent review of 'family matter' after rioters wreak havoc in Leeds on night of 'shocking' carnage

Brendan Cole slaps his partner Fiona Hill's bottom three times

Strictly pro dancer slaps female partner's bottom three times in freshly surfaced footage, after two dancers leave show

Trump gunman researched Royal family member during planning for assassination attempt

Donald Trump gunman 'scoped out Kate Middleton and had pictures of her on his phone' before failed murder attempt

Thousands of flights were cancelled across the globe on Friday.

Misery for holidaymakers as 4,000 flights grounded by IT outage that sparked chaos, and recovery 'could cost billions'

Christina Sandera and Clint Eastwood in 2018

Clint Eastwood's partner Christina Sandera dies aged 61, as 94-year-old Hollywood icon gives poignant tribute

Israeli occupation of Palestinian territories is unlawful, the International Court of Justice has ruled

Top UN court rules Israeli occupation of Palestinian territories 'unlawful', as Netanyahu slams 'false decision'

Over 4,000 flights have been delayed or cancelled today.

Has your flight been affected by the global IT outage? Can you claim compensation?

Friday was the hottest day of the year so far - but the mini heatwave will end soon

Exact date mini-heatwave to end, as Friday becomes hottest day of the year so far with temperature close to 32C

Ben Ross has been missing since July 10

Mum of missing Brit Ben Ross to fly to Majorca for desperate search as police issue statement

Shaikha Makhra announced her split on Instagram

Dubai princess announces divorce from husband via Instagram 'as he is occupied with other companions'

Thousands of flights where cancelled across the globe on Friday.

Worldwide IT outage could last 'days' as flights grounded, shops closed and operations cancelled

The Kering Foundation Hosts First-Ever Caring For Women Dinner

Emma Watson ‘stalker’ arrested after demanding to see Harry Potter star at Oxford fashion show

Passengers are facing delays across the country

Is your flight delayed? Airports and airlines issue updates after mass IT outage causes travel chaos around the world

Evan Gershkovich, a Wall Street Journal reporter, was detained last March on spying charges

American journalist jailed for 16 years in Russia after being convicted of espionage

People have been out enjoying the sunshine ahead of the weekend.

Hot hot hot! Temperatures soar to 31C today and 30C tomorrow after an uncomfortable tropical night tonight