According to the Office for National Statistics (ONS), more than 1.4 million households on fixed-rate mortgages will see the end of their deals this year. And based on data from the Bank of England, the ONS is reporting that the peak of the end of these fixed deals will be between April and June of 2023. This means that over a million households will be spending hundreds more on their monthly repayments in the very near future.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
Fixed-rate deals up for renewal
Up until now, borrowers on fixed-rate mortgages have been safe from the numerous Bank of England base rate hikes recently. Over half (57%) of these mortgages up for renewal were taken out when interest rates were below 2%, so they’re entering quite a different market this time around. With a current rate of 4.25% after the latest rise in March, these borrowers are going to be seeing a big difference in rates.
At the moment, the average interest rate of a variable rate mortgage is 4.41% and average interest rates on new fixed-rate mortgages are now up to 6%.
An increase from 2% to 6% on a £300,000 mortgage means that monthly repayments would rise from £1,272 to £1,933 — an increase of £661!
Luckily, the ONS also suggests that homeowners on fixed-rates that will be ending this year will likely only see increases of about £250 on refinancing to a new fixed deal. But in this current cost of living crisis, every penny counts, so this could be an issue for many borrowers.
Consider talking to your current provider first to see if they’ll take your existing relationship into consideration. They may be willing to work with you on your new deal. But if they’re not, start gathering everything that you need to begin the remortgaging process.
If your fixed-rate mortgage is coming up for renewal this year and you want to learn more about your options, get in touch with the trusted mortgage experts at Dental & Medical Financial Services.