Source: BBC News —
Almost two million households will see fixed-rate mortgage deals end this year, with most facing the prospect of higher monthly payments.
What options do borrowers have?
What’s happening to mortgage rates?
About 20% of residential mortgage-holders have variable rate or tracker loans, totalling about 1.6 million households in the UK.
Their monthly repayment rises whenever the Bank of England increases its benchmark interest rate, which it has done 10 times in a row.
A typical homeowner on an average tracker deal now pays almost £400 more a month than in December 2021, when rates started to rise.
Fixed-rate mortgages are different. The monthly payment stays the same for the length of the deal – usually two or five years. About 78% of mortgage holders – some 6.5 million homeowners – have this type of mortgage.
When these deals expire, borrowers automatically move onto their lender’s standard variable rate (SVR), which tends to be much more expensive. At the moment SVRs are typically 7% or 8%.
It is thought that 1.8 million fixed deals will end in 2023.
At this point, the vast majority of borrowers take out a new fixed-rate mortgage with the same lender or a rival. About three-quarters use a broker to find a deal.
But the fixed-rate deals available now are much more expensive than they used to be. A couple of years ago, the best deals were at 1% whereas the best rates now are 4%.
Average rates – which had already been rising – soared after the September mini-budget, but have dropped back since.
Even so, many homeowners face the prospect of paying hundreds of pounds more a month on their mortgage repayments.
;
