Tuesday 25 February 2014 8:39 pm

Mortgage payments will jump by billions if rates start to rise

BRITISH home owners could be forking out an extra £2.2bn on mortgage repayments by the end of next year, according to a major bank’s forecast for the Bank of England’s next interest rate hike.

In an adverse but realistic scenario, the projection suggests that repayments could rise by as much as £5bn by 2015, raising a typical monthly repayment in London by £77, according to research by Barclays Mortgages and the Centre for Economics and Business Research (Cebr).

Barclays suggest that in the most likely scenario, the Bank of England raises interest rates three times by the end of 2015, up to 1.25 per cent, and making an average UK monthly mortgage payment £21 more expensive each month. In the “drastic” model, rates are raised to 1.75 per cent and the average payment rises by £48.

“The impending rise in mortgage rates that we can see from these scenarios will undoubtedly squeeze some homeowners,” commented Andy Gray, of Barclays.