UK banks are offering more temporary flexibility to homeowners struggling to afford rising mortgage costs with the country facing a 'mortgage crunch,' according to experts. 

‌The cost of interest rates for home loans shot up again this week, and on Thursday the Bank of England raised its key rate by half a percent - which was higher than expected. All this means many people face the prospect of spending thousands of dollars more on annual repayments or being forced to sell their homes. 

Mortgage lenders have been putting up rates and pulling deals at the last minute. The average interest on a two-year fixed-term mortgage rose to 6.01 percent on June 19, the first time it has reached that high since December, but still below the peak after the so-called mini budget crisis in September.

Raphael Isnard works in business insurance. He feels relatively lucky to still have a couple of years left on his mortgage's current fixed rate - but fears that his repayment costs will inevitably rise significantly soon.

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"It's very worrying, we're actually taking a lot of measures right now to save money because we don't know what it's going to look like in a couple of years. So it's a bit scary. I'm concerned that it's not going to go down, I don't see it going down in the next couple of years and with the news released a couple of days ago it's even more worrying," Raphael told CGTN.

More than 400,000 people are due to see their existing fixed deals end between July and September – a relatively high number. The Resolution Foundation think tank reports the average cost of remortgaging next year will rise by nearly $3,700 annually. Many people now face the prospect of reducing their spending elsewhere – or even selling their home to downsize.

"It's a massive impact, it doesn't matter if you have a higher salary or low budget you will be equally affected," Kamil Waluszewski, a mortgage broker and director of Best Solution Mortgages in West London, told CGTN. 

Kamil has been in the industry for 12 years and sees similarities with the aftermath of the 2008 financial crisis – but the difference this time is that mortgage holders have more debt. And today clients are seeing deals vanish at the last minute.

"Even today, I got the message from TSB that it was the latest lender, practically stopping lending, without notice withdrawing all the products. It was the same with HSBC last week, the same with Santander. It's stressful for us, stressful for clients and it's not sustainable in the long term," said Kamil.

With annual inflation staying stubbornly high at 8.7 percent in April, the government says its priority is bringing that down. However, the UK Finance Minister Jeremy Hunt has agreed measures with lenders to help those struggling to keep up with payments, including a grace period on repossessions and credit rating protections for those changing their mortgage terms.

"For people who are at risk of losing their home in that extreme situation, the banks and mortgage lenders have a number of things in place," said Hunt. 

"It's the last thing that they want to do, to repossess a home. But in that extreme situation, they have agreed there will be a minimum 12-month period before there's a repossession without consent," said Hunt.

Homes may also now undergo a decrease in value. Property website Rightmove says the average asking price for homes has fallen for the first time this year. 

West London estate agents Whitman and Co. say prices are staying quite strong, but it is challenging to manage expectations for what clients can afford.

"The trouble we're finding now is people are going to the market with a budget based on their affordability at the time," said Whitman's Director Chris Chalmers.

"As they go through the buying process, they find a property they want to buy, make an offer and when they've had their decision in principle at a certain rate, find the property they really want to buy, go for a full application and find the product has gone. It's going to be tough out there for quite a few people for quite some time," warned Chris.

The saying goes, 'an Englishman's home is his castle,' but that dream is going to be a lot more expensive – or even unobtainable – for some time to come.

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