If you've been reassured by positive recent news on inflation and a widely-anticipated cut in interest rates later this year, unfortunately the Bank of England has a worrying update for mortgage payers.About three million UK households are still set to witness hikes in their mortgage repayments over the next two years, the Bank has said.Its Financial Policy Committee added there are likely to be 'very large increases' of more than 50% for the mortgages of around 400,000 households.
Why is the outlook so bad if interest rates are expected to fall?Interest rates are at a 16-year-high of 5.25%, with the central bank voting to maintain the figure for a seventh consecutive meeting earlier this month.But many economists have predicted the base rate could be reduced at the Bank's next vote in August.