Homeowners could be burdened with high monthly mortgage payments for longer than they expected as interest rates remain stubbornly high, official projections suggest.
Average mortgage rates are now predicted to rise from about 3.7 per cent this year to a peak of 4.5 per cent in 2027, then stay there until the end of 2029. This is 0.3 percentage points higher than previously predicted by the Office for Budget Responsibility (OBR), the government spending watchdog.
In its latest forecast, released on Wednesday, the OBR said higher mortgage rates would be driven by a higher-than-expected base rate over next year and 2026. Its economists think the Bank of England will lower the base rate from its present level of 5 per cent to 3.5 per cent