Source: Yahoo! Finance —
More than 1.4 million households are facing the prospect of interest rate rises when they renew their fixed-rate mortgages this year, according to the Office for National Statistics (ONS).
The majority of fixed-rate mortgages in the UK (57%) which are coming up for renewal in 2023 were fixed at interest rates below 2%, it said.
Deals that are due to mature in 2024 will include two-year fixed rate deals from 2022 and five-year fixes from 2019, when mortgage rates were generally higher than 2%, the report added.
The ONS said that, based on Bank of England data, a peak in fixed deals ending is expected between April and June this year.
A string of Bank of England base rate hikes have taken place over the past year, but borrowers on fixed-rate mortgages have been cushioned from their immediate impact. Some may get a shock when they come to renew.
Mortgage rates spiked last autumn in the aftermath of the mini-budget, but have since started to settle.
The “effective” – or average – interest rate on outstanding mortgages with a fixed rate was 2.08% in November 2022, the report said.
This contrasted with an average interest rate of 4.41% on variable-rate mortgages and average interest rates being offered on new fixed-rate mortgages at about 6%.
Should the interest rate on a £100,000 mortgage increase from 2% to 6%, assuming a 25-year capital and repayment mortgage, then the monthly repayment on the same mortgage would increase by £220, from £424 to £644, the ONS said.
Assuming the same increase on a £300,000 mortgage, monthly repayments would rise by £661, from £1,272 to £1,933, it said.
