Inflation and interest rate rises from the Bank of England are both contributing to the increase, which will put a further squeeze on many families finances.
Annual mortgage repayments are set to rise by £2,900 for the average household remortgaging next year, according to a think tank.
As the UK's"mortgage crunch" deepens, total annual mortgage repayments could rise by £15.8bn by 2026, the Resolution Foundation said. Prolonged inflation has raised expectations that the Bank of England's base rate-rising cycle, which started in December 2021, will continue for longer than originally thought.Those higher expectations are moving through into mortgage rates, with deals being withdrawn from the market and being replaced by higher rates.
Data released by Moneyfactscompare.co.uk indicated that the average two-year fixed-rate homeowner mortgage was just below the 6% mark, at 5.98%. The Resolution Foundation said it is expected that the average two-year fixed-rate mortgage will not fall below 4.5% until the end of 2027.
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