LONDON, June 27 (Reuters) - British businesses and households are generally coping well with high interest rates, although some, especially renters, are under pressure, the Bank of England said on Thursday.

However, global asset prices were vulnerable to "a sharp correction" as investors were generally demanding very little compensation for the risks they were taking on, the BoE said in a half-yearly update on financial stability risks.

"Markets continue to price for a benign central case outlook ... despite the global risk environment facing several challenges," the BoE's Financial Policy Committee said after a quarterly meeting.

Risks identified by the BoE included commercial real estate in the United States and elsewhere, and increased volatility from overseas elections such as those coming up in France which have hit French government bond prices.

The BoE's half-yearly Financial Stability Report comes just a week before Britain's own elections, which polls suggest will see Labour Party leader Keir Starmer deliver a heavy defeat to Prime Minister Rishi Sunak and his Conservative Party.

Last week the BoE kept its main interest rate at a 16-year high of 5.25%, despite inflation returning to its 2% target in May, as it waited for more evidence that longer term sources of inflation pressures such as wage growth were easing.

In its previous FPC report in March, the BoE said UK borrowers had been resilient to the impact of higher interest rates, and it stuck with this view in June.

The BoE said around a third of British mortgage holders were still paying rates of less than 3%, and were likely to see their average monthly mortgage payment rise by 180 pounds or 28% as they refinanced between now and the end of 2026.

However, the proportion of households struggling with mortgage payments was expected to stay far below levels seen after the 2008 global financial crisis, due to tighter lending rules over the past decade.

By contrast, many renters were struggling. The proportion who were behind on their rents had risen to 16.5% in the first quarter of this year from 15.7% a year earlier, as landlords passed on the cost of higher mortgage rates.

Many renters and poorer households were running down their savings and charities had reported a significant number of lower-income households borrowing to pay for essentials, the BoE said.

(Reporting by David Milliken and Huw Jones)

((david.milliken@thomsonreuters.com))

Keywords: BRITAIN BOE/

By David Milliken and Huw Jones