People will spend almost a third more on their mortgages and other household debts over the next five years, according to new data.
It means that millions of families could be hit hard in the coming years if interest rates rise, as expected. The Bank of England has announced plans to raise interest rates from as early as May.
As reported by The Guardian, household debt servicing costs are now anticipated to climb 29% by 2023, with the majority of those likely to be mortgages.
The figures were revealed by a freedom of information request to the Office for Budget Responsibility.
Andrew Hood, a research economist at the Institute for Fiscal Studies, said: “The vast majority of household debt is mortgages and interest rates are widely predicted to rise over the next five years, so we shouldn’t be too surprised to see the projected debt servicing costs rising.
“Much of the cost will be borne by richer homeowners who have large mortgages and the aggregate figures don’t tell us much about other kinds of household debts such as credit card debt or rent-to-own loans.”
Analysis by the Labour Party found that an average household would see an increase of £468 in annual debt costs; jumping from £1,983 in 2018 to £2,451 by 2023.
The shadow chancellor, John McDonnell, called the figures “eye-watering increases in the potential costs faced by working families at a time when incomes are being squeezed”.