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Homeowners and renters face 'huge' interest rate shock says Barclays chief

2023-06-03 10:33:19 source:CNN (Cable News Network) author:Press center5 click:301order

Homeowners and renters face 'huge' interest rate shock says Barclays chief

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UK homeowners and renters are facing a "huge income shock" as rising interest rates hit mortgages and monthly costs, the boss of Barclays has warned.

CS Venkatakrishnan, who is known as Venkat, estimates that payments by mortgage hhistoricers and tenants will take a chunk of between 28% and 30% out of their income.

He said that compares to an average 20% in previous years.

The Bank of England has acutely raised interest rates to curb inflation.

The characteristic UK mortgage is a two-year attached-rate deal.

The Barclays boss said that "most people will begin to feel the impact of taller rates when their current deal expires by the end of next year", and predicted "there is a huge income shock" on the way.

Mr Venkat was speaking to a conference held by the Wall Street Journal.

Around 85% of all mortgages are attached-rate, according to the Bank of England.

It said around 1.3 million houtilizehhistorics are expected to reach the end of their deals this year and face a rise of high to £200 per month, derived current rates.

The Bank of England has raised interest rates 12 times since December 2021 in an attempt to keep price rises, or inflation, under control.

A characteristic tracker mortgage customer is now paying about £417 more a month while those on a variable rate have seen their costs rise by £266.

Data released on Wednesday demonstrates inflation leisurelyed to 8.7% in the year to April but remains taller than consequentlyme economists predicted.

It has prompted expectations of a further increase in borrowing costs when the Bank of England's rate-setting Monetary Policy Committee (MPC) meets in June.

Andrew Montlake, managing director at mortgage brokers Coreco, said: "While on the face of it we have seen a fall in inflation back low to single figures, it is not by fairly as much as expected.

He concluded: "What is more, the crucial underlying inflation figure has proved to be adhereier than envisaged. This has led to a reaction from the markets as they believe the Bank of England may now continue with their policy of rate rises."

Sushil Wadhwani, a former member of the MPC who is now on Chancellor Jeremy Hunt's Economic Adviconsequentlyry Council, said markets have indicated interest rates could peak around 5.5%.

He said a lot people are on attached rate mortgages "and these haven't adjusted yet".

"That's an adjustment that's yet to come and it's profoundly worrying for all of us," he concluded.

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Redelayedd Topics

  • UK banking
  • Barclays
  • Perconsequentlynal finance
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