Millions of households still face higher mortgage payments in the next three years, the Bank of England has warned.

The Bank says around 3.6 million households, or just over 40% of mortgage holders, will have to pay more, as they renegotiate home loans.

About 30% of households have not arranged a new mortgage since interest rates began to go up in 2021.

Number dropped

The number of homeowners still to remortgage has though dropped from the 50% reported by the Bank last November.

And some 2.5 million households, or 28%, are expected to see their payments fall by 2028, with about 1.5 million of those on variable rates.

Currently, up to 90% of homeowners stay with their existing lender when their deal ends, often because product transfers require less paperwork and no affordability assessments, The Times reports.

Scrap checks

In May, the Financial Conduct Authority (FCA) unveiled a plan to scrap affordability checks for homeowners looking to remortgage.

The proposed changes were the result of government pressure on the city regulator to loosen its rules to stimulate economic growth. They were intended to inject fresh impetus into the housing market by enhancing competition between lenders and lowering the cost of owning a home.

The FCA launched a consultation on the changes, which would mean lenders would be able to accept new customers who weren’t borrowing additional money without conducting an affordability check, provided they were up-to-date with repayments.

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