Bad start to the year for borrowers and there’s more to come

Affordability may be pushed to the limit - and in some cases beyond - for many homeowners in the wake of the Bank of England rate rise, said broker My Mortgage Direct (MMD).

And although this increase was expected, it will still hit hard those who have borrowed but ignored the signs.

“More rate rises are bound to follow – and almost certainly we can anticipate a further 0.25 per cent this side of the summer,” said MMD managing director Paul Hearnden.

“We should remember that even at 5.25 per cent this increased rate is still low by historical standards, but we live in a world where people live for today, don’t plan for tomorrow and history is a thing of the past!” he added.

“There will be casualties – there always are whatever the rate – and with today’s rise seeing the cost of a typical £150,000 interest only mortgage increase by just over £31 a month, the rising trend of repossessions can only continue.”