Every six weeks, at noon on Thursday, mortgage lenders in the UK prepare for more bad news. It’s the moment when the Bank of England’s latest decision on interest rates is announced.

For a year and a half, the central bank raised interest rates at every meeting as policymakers tried to stamp out high inflation. With each increase, millions of Britons prepare to put more money towards their monthly mortgage payments and cut back on other expenses.

A decade of low interest rates, followed by a rapid rise in rates, has upended budgets all over the country. Alarm is rising among the affected households, charities have been stretched thin and politicians are heading to an election next year.

Many people in the UK have mortgages with a rate that is only fixed for a short period, usually two or five years, unlike US mortgage rates, which are often fixed for 30 years. The average rate of two-year fixed rates rose to the highest level since 2008.

At the end of the fixed period, mortgage holders can shop for different offers, usually choosing between a variable mortgage – which can move up and down whenever the lender decides or with interest rates – or another fixed loan. Many people get out of rates below 2 percent and now face terms above 6 percent.

In the UK, one of the most direct ways that higher interest rates affect people is through higher mortgage rates, but the impact varies widely across the population.

Just over a third of households own their home outright, so will be insulated from rising mortgage rates. About the same proportion rent their homes, and many were already facing large rent payments. The rest – 28 percent of households – have a mortgage.

On average, households with mortgages will pay almost 280 pounds (about $365) more each month if mortgage rates remain at their current levels, compared to March 2022. according to the Institute for Fiscal Studies. The burden will fall more heavily on those younger than 40, the research organization said.

To some extent, luck – or bad luck – will determine how painful the jump in mortgage rates will be for households, as it will depend on when the fixed-term rate expires.

A decade-long shift among homebuyers away from variable rates to fixed rates means many people don’t feel higher interest rates immediately. But the longer rates stay raised, the more people will have to join higher fixed rates.

By the end of this year, around three million mortgage holders will experience an increase of up to £500 ($650) a month on their payments, the Bank of England estimates.

About 4.5 million households have already seen increases in payments since the Bank of England began raising interest rates in December 2021, the bank said, and another four million will be affected by higher rates by the end of 2026. But the central bank evaluates the financial burden will continue to be lower than it was during the 2008 financial crisis.

“It’s a difficult situation facing individual households that have to refinance,” said David Muir, senior economist at Moody’s Analytics. “They are facing, in some cases, very sharp increases in payments because of the extent to which interest rates have risen compared to where they were initially set.”

This will reduce their ability to spend and weigh on the country’s economic growth, Mr Muir added. But Britain’s households are less indebted than they were during the financial crisis, so there are lower risks of repossessions and lenders are better able to help, he said.

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