Many UK homeowners could experience rises of up to 30% in their monthly mortgage repayments over the next year, as they reach the end of discounted mortgage deals.
Up to a million households are nearing the end of two- and three-year fixed-rate mortgages taken out in 2005, and these policies will shift to more expensive rates. Many fixed rate deals were around in 2005 after an interest rate cut in that year.
According to Credit Suisse analysts, around 20% of the UK mortgage market moved onto such fixed rate deals during 2005 this represents a massive £200bn of mortgages.
Credit Suisse analyst Jonathan Pierce told the Telegraph that up to a million households could face increased mortgage payments of 25-30% in some cases. Some householders may find themselves paying hundreds more each month.
Fixed rate mortgage deals were at around 4.5% in 2005, but these kinds of mortgages have now risen to around 6%. In the case of a homeowner with a £125,000 interest-only mortgage, their repayments would leap from £457 to £612 per month.
Consumers have the option of finding better fixed price deals, but there are fewer available on the market at the moment. If householders do nothing, they will be switched to their mortgage lenders standard variable rate, around 7.5%.
Such increases in monthly mortgage payments will inevitably lead to more households getting into arrears, with the increased risk of repossession for some.
If you are in trouble with debt, and have been unable to make or keep up with payment arrangements, it may be better to sell your house quickly to pay off your debts rather than wait until your house is repossessed and sold off cheaply at auction.