Nicola Stockdale bought her much-loved terrace home in Market Deeping, Lincolnshire, for £140,000.
At the age of 24 it was a big undertaking, but she was sure it made economic sense. It has risen in value to about £200,000 in just under seven years.
For most of that time, the renal technician moved through a succession of fixed-rate deals until deciding in November that what was on offer was not good enough value.
Ms Stockdale did not want to be stuck with high repayments for two years and instead opted for a standard variable rate, hoping better times for the economy were around the corner.
But as mortgage rates increased, her repayments have spiralled upwards.
What was a £459 monthly bill has swiftly become a £656 bill and is likely to head upwards again, leaving her to wonder how many more rate rises she can bear.
Ms Stockdale does not know how she can cope with higher repayments, especially at a time when energy bills are also rocketing.
She is not alone. As rates have risen, deals have disappeared. Interest only mortgages have become scarce.
First-time buyers face an almost impossible task to get on the property ladder, while those approaching the end of their long-term fixed rate deals are in for a financial beating when they finally seek their next product and discover that taking their chances with the bank rate is their only option.
Homeowners across the UK will probably be told on Thursday that their mortgages repayments have risen again, leaving many to tighten their belts once more.
So all eyes are on the Bank of England at the moment as its interest rate-setting monetary policy committee meets to discuss the cost of borrowing.
Analysts are expecting a rise of 0.5 percentage points to 4 per cent to be announced on Thursday. It is also thought the increase will be one of the last in the current cycle.
It would mark the highest level of interest rates since 2008 and the quickest string of increases in three decades.
The Bank of England has been lifting rates steadily for more than a year. In December 2021, the base rate was 0.1 per cent, as policymakers tried to encourage consumer spending after Covid slowed the economy.
In December last year, interest rates were set at 3.5 per cent, as the bank battled to get inflation back down its 2 per cent target.
Inflation in the UK is at 10.5 per cent, slightly below the 41-year high of 11.1 per cent in October.
'Think twice about pushing rates up too much'
Deutsche Bank suggested that Thursday would mark the final “forceful” rise in the tightening cycle with a 0.5 percentage point increase.
The need to “go big” is because of several factors, including that wage growth has beaten expectations, indicating consumers still have some spending power and that prices are still historically elevated, Deutsche said.
Societe Generale Global Economics suggested the same, but said it expected another 0.5 percentage point increase in March before coming back down.
“Even though the outlook is less gloomy than expected only three months ago, we still think a recession is likely and the MPC’s forecasts should continue to predict one for this year," the SocGen economists said.
“This, and the mounting evidence of some cooling in the labour market, vacancies and job growth in particular, should lead the committee to contemplate an imminent end to tightening
Some feel that the bank will be less aggressive with interest rates on Thursday, with a rise of 0.25 percentage points more likely.
"Recent weeks have ushered in a greater sense of economic optimism," said Philip Shaw, chief economist at Investec.
"This has been driven partly by the mild European winter, which has helped to avoid a need for energy rationing, contributing to a substantial fall in current spot gas prices, as well as gas price futures."
Likewise, AJ Bell analyst Laith Khalaf said a lot had changed since the bank's last meeting, including the fall in gas prices, which will make the MPC "think twice about pushing rates up too much".
Nonetheless, any increase will squeeze household budgets further, when they are already struggling with soaring energy and food costs.
The bank will make its decision on interest rates a day after about half a million British workers go on strike.
Teachers, train drivers, civil servants, university lecturers, bus drivers and security guards from seven unions walked out on Wednesday, in what has been the largest day of protest action in more than a decade.
Real household disposable incomes are expected to fall by 3 per cent this year, according to Investec's Philip Shaw, and the accompanying squeeze in spending will make "a recession virtually unavoidable".
The bank this week said mortgage approvals for house purchases fell to 35,600 in December from 46,200 in the previous month, to their lowest since May 2020.
This marked the fourth consecutive monthly decrease in mortgage approvals.
Mortgage rates increase
The rises in interest rates over the past year have meant correspondingly steep rises in mortgage rates.
Also, the bank said the “effective” interest rate (the actual interest rate paid) on newly drawn mortgages increased to 3.67 per cent in December. Last January, the effective interest rate was 1.58 per cent.
Interest rates on mortgages tend to vary greatly and depend largely on the financial circumstances of the individual, the loan-to-value (LTV) calculation and the size of deposit.
According to data from Uswitch and Dashly.com, the average two-year fixed mortgage rate, based on 75 per cent LTV, is 5.32 per cent.
The average two-year variable mortgage rate is 4.29 per cent (again, based on an LTV of 75 per cent), while the average standard variable rate in the UK is 6.82 per cent.
But rates can vary enormously, depending on personal circumstance.
Amanda, 57, lives in a three-bedroom house in Redhill, Surrey, just south of London.
She is what is commonly called a "mortgage prisoner". Because of changes to mortgage affordability rules after the global financial crisis in 2008 and the fact that the lender who originally granted her mortgage was the ill-fated Northern Rock, she has been unable to remortgage to a better deal for decades.
Such mortgage prisoners paid relatively high interest rates, even in the recent years of so-called cheap money, when the world's major central banks keep base rates at historic lows.
"My interest-only monthly mortgage payment has gone from £1,200 to £2,200 [$1,478 to $2,710] in a year," Amanda told The National.
"It's hit my credit score, which I've desperately tried to keep as healthy as possible. I'm just borrowing and borrowing and borrowing. I don't even know how I'm going to pay my fuel bill."
If the regulator does increase rates by another 0.5 per cent on Thursday, it will add another £150 to Amanda's monthly mortgage payments.
"I don't really know what the future holds. It's horrible," she said.
Ms Stockdale will do everything she can to keep her much-loved home. When she bought it, it was part of a shared ownership scheme and she now owns 80 per cent of it.
"I put off going on to a new fixed deal, I couldn't face being stuck at that rate for two years," she told The National. "I had the mindset that if I fixed then, I was stuck."
Ms Stockdale chose to go with variable rates in the hope that it wouldn't last long and payments would come down, saving her money in the long run.
There is little she can do to improve her situation. As a mother of a small child, she is already working 30 hours a week earning a salary of about £16,000.
She halved her pay in comparison to her full-time, pre-maternity role.
If Ms Stockdale sells her home, then her equity would be used on renting — at an even higher price — putting her back to square one pretty soon.
"I'm adamant I'm not letting go of this house," she said. "I just hope there's a saviour out there."
