New research from Yorkshire Building Society has found four in five (83%) people expect inflation to hit their personal finances in the next five years.
Nearly eight in 10 (78%) think interest rates will have an impact, while three quarters (75%) anticipate being affected by Government policies on tax and regulation.
It comes as the Government prepares the Budget, which will take place on 26 November.
Separate analysis by the Society shows typical mortgage payments have climbed by nearly half in the last five years. The average homeowner on a two-year fixed mortgage was paying £931 a month in 2020, compared to £1,487 in 2025, an increase of 46 per cent, or 22 per cent in real terms.
According to Moneyfacts, the UK’s leading provider of financial product data, the average interest rate on a two-year fixed mortgage with 90% LTV was 3% in 2020 and 5.5% in 2025. The Bank of England base rate has risen from 0.1 per cent in early 2020 to 4 per cent now, after peaking at 5.25 per cent in 2023 and 2024.
Inflation rose rapidly to peak at 11.1 per cent in October 2022, and while it has dropped to 3.8 per cent, it remains above the Bank of England’s target of 2 per cent.
The mutual’s research also found more than half of people (57%) wanted to better understand how inflation and interest rates affect their personal finances, with younger people being the keenest for more information. 73 per cent of 18-24s said they wanted to know more, compared to 42 per cent of over 55s.
Max Shepherd, Group Economist for Yorkshire Building Society, said: “People’s pockets have been hit hard in the last five years because of rising inflation and interest rates. So it’s not surprising that people are worried about the impact they could have in the five years to come.
“We’ve seen inflation rise sharply in recent years, and the Bank of England has reacted by raising interest rates. While many will be relieved inflation has come down, it remains above the Bank of England’s target.
“People are right to want to better understand how economic and political decisions affect their household budgets, so they can equip themselves with the information they need to make their money go as far as it can.
“As a building society, we believe every penny should work as hard as the people who earn it, and we’re here to support our members to build stronger financial futures.”
Rachel Springall, Finance Expert at Moneyfacts said: “The past five years have been a challenge for consumers, particularly those struggling with the cost of living. Borrowers who locked into a cheap five-year fixed in 2020 will be facing higher mortgage repayments when they come to remortgage, so they could well see a dip overall in their disposable income.
“Taking time out to budget will be vital in the months ahead to ensure all the essential outgoings are covered amid rising costs.
“Seeking advice is wise to secure a competitive mortgage, but also to ensure any savings accounts are working hard to beat the eroding power of inflation.”
