House bills to rise with rates

A LARGER interest rate hike than is currently expected would add thousands of pounds to UK mortgage holders’ bills, according to a warning from Legal & General.

The financial services firm said yesterday that for the average property, a three per cent increase in interest rates would add £163.38 to a mortgage bill – the equivalent of nearly £2,000 per year.

“The improving economic picture means a rise in interest rates is inevitable. Banks are already pricing in this increase, so it is vital that they act now to get a good deal,” said Legal & General’s Jeremy Duncombe.

Bank of England governor Mark Carney signalled a change of direction for the Bank last week, suggesting that rates could rise more quickly than markets expect.

Resolution Foundation chief economist Matthew Whittaker suggested yesterday that even with bank rate at 0.5 per cent, one-fifth of households would be struggling with mortgage repayments.