Barclay’s CEO CS Venkatakrishnan has warned that British households with fixed-term mortgages will be affected by higher interest rates when their current deals expire by the end of next year. He stated that a larger portion of households’ earnings will be spent on mortgage payments, leading to a “huge income shock.” The Office of National Statistics has reported more than 1.4 million households in the UK will face interest rate increases when they renew their fixed-rate mortgages in 2023. Homes will be affected when brokering new deals as mortgage rates increasing. As people start to spend more on mortgages, their consumption will be affected, and in addition to other factors, Venkatakrishnan remarked that the effect of inflation on food, energy, and basic goods and services would cause additional issues. The Bank of England may be pressured to raise interest rates in June because of the current high inflation rate of 8.7 percent. Venkatakrishnan stated that UK consumers are “economizing” and substituting premium brands for generic ones as well as spending more on essentials and less on non-essentials.
Households on fixed-term mortgages face significant income loss, predicts expert.
