As many as 320,000 UK adults have been pushed into poverty by soaring mortgage costs after the sharpest increase in interest rates since the 1980s, according to the Institute for Fiscal Studies (IFS). Individuals renewing or taking out new mortgages in the past two years experienced a notable decline in disposable income, leading to a rise in poverty rates among mortgagors by 1.4 percentage points between December 2021 and December 2023.
Millions of homeowners faced higher borrowing costs following 14 consecutive Bank of England base rate hikes, reaching 5.25%. This surge was exacerbated by increased mortgage rates set by banks, particularly after events like Liz Truss's mini-budget. However, the impact varied, with homeowners on fixed-rate deals before the hikes being less affected compared to renters.
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