Homeowners across the UK are feeling the pinch as interest rates remain stubbornly high. With inflation expected to fall back to the Bank of England’s 2% target, many are hoping for some much-needed relief.

The big question on everyone’s mind is: will the Bank of England finally cut interest rates?

The latest figures show that inflation is likely to hit 2% in May, down from 2.3% in April. This positive news comes as homeowners struggle with the impact of 14 consecutive interest rate hikes since December 2021.

These hikes have significantly increased the cost of borrowing, with the best rate on a two-year fixed-rate mortgage now at 4.82%. This is more than double the rate of 2.34% available in June 2022.

To put that into perspective, someone with a £250,000 mortgage over 25 years now faces monthly payments of £1,435, compared to £1,102 a year ago. That’s a whopping increase of £333 each month – or an extra £3,996 over the year.

This financial strain is sadly pushing many homeowners to the brink, with repossessions and mortgage arrears on the rise:

• Repossessions soared by 36% in the first quarter of 2024, with 870 homes repossessed.
• Over 96,580 homeowners fell into serious mortgage arrears in the same period, representing a 3% increase.

The Bank of England has defended its decision to raise rates, arguing it was necessary to combat soaring inflation, which peaked at 11.1% in October 2022. However, with inflation now approaching the 2% target, many are questioning the need for further delays in cutting rates.

Paula Higgins, chief executive of the HomeOwners Alliance, has urged the Bank of England to provide immediate relief to struggling homeowners:

“Inflation is no longer running at 10% – it’s almost at its 2% target. And yet the Bank of England continues to use it as an excuse to keep interest rates at the current 16-year high.”

Higgins expressed concern over speculation that rate cuts may not occur until September, arguing that homeowners are unfairly bearing the brunt of the Bank of England’s policies.

She called on the Bank of England to “stop this attack on homeowners and drop the base rate” immediately.

As homeowners anxiously await the Bank of England’s next move, the hope is that the latest inflation figures will finally pave the way for some long-awaited relief.