Homeowners face huge interest rate shock, says Barclays boss

UK homeowners and renters are facing a "huge income shock" arsenic rising involvement rates deed mortgages and monthly costs, the brag of Barclays has warned.

CS Venkatakrishnan, who is known arsenic Venkat, estimates that payments by owe holders and tenants volition instrumentality a chunk of betwixt 28% and 30% retired of their income.

He said that compares to an mean 20% successful erstwhile years.

The Bank of England has sharply raised involvement rates to curb inflation.

The emblematic UK owe is simply a two-year fixed-rate deal.

The Barclays brag said that "most radical volition statesman to consciousness the interaction of higher rates erstwhile their existent woody expires by the extremity of adjacent year", and predicted "there is simply a immense income shock" connected the way.

Mr Venkat was speaking to a league held by the Wall Street Journal.

Around 85% of each mortgages are fixed-rate, according to the Bank of England.

It said astir 1.3 cardinal households are expected to scope the extremity of their deals this twelvemonth and look a emergence of up to £200 per month, based connected existent rates.

The Bank of England has raised involvement rates 12 times since December 2021 successful an effort to support terms rises, oregon inflation, nether control.

A emblematic tracker owe lawsuit is present paying astir £417 much a period portion those connected a adaptable complaint person seen their costs emergence by £266.

Data released connected Wednesday shows ostentation slowed to 8.7% successful the twelvemonth to April but remains higher than immoderate economists predicted.

It has prompted expectations of a further summation successful borrowing costs erstwhile the Bank of England's rate-setting Monetary Policy Committee (MPC) meets successful June.

Andrew Montlake, managing manager astatine owe brokers Coreco, said: "While connected the look of it we person seen a autumn successful ostentation backmost down to azygous figures, it is not by rather arsenic overmuch arsenic expected.

He added: "What is more, the important underlying ostentation fig has proved to beryllium stickier than envisaged. This has led to a absorption from the markets arsenic they judge the Bank of England whitethorn present proceed with their argumentation of complaint rises."

Sushil Wadhwani, a erstwhile subordinate of the MPC who is present connected Chancellor Jeremy Hunt's Economic Advisory Council, said markets person indicated involvement rates could highest astir 5.5%.

He said a batch radical are connected fixed complaint mortgages "and these haven't adjusted yet".

"That's an accommodation that's yet to travel and it's profoundly worrying for each of us," helium added.

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