Repayments soar at end of current fixed rate deals

Mortgage borrowers coming to the end of fixed rate mortgage deals this month could see their monthly repayments soar by more than £300, by my reckoning.

£30 billion of fixed rate mortgages are due to expire by the end of this month, and with lenders’ rates running at much higher percentage rates than previous years, many borrowers face a drastic increase in their monthly repayments.

On a typical two-year fixed rate mortgage signed in 2006 at a rate of 4.5%, repayments on the following loans would be £277.92 on a £50K loan; £555.83 on a £100K loan; and £1111.67 on a £200K loan. On a typical rate of 7.1% today, however, monthly repayments would increase to: £356.58 on the £50K loan; £713.17 on the £100K loan; and £1426.34 on the £200K loan.

Few people are actually aware that even a half or quarter per cent of an increase in interest rates can translate to £50 less in their pocket each month, so for the rate to jump up by 2% or 3% overnight could come as a big shock. The rates I’ve quoted are fairly typical of the current market, and whilst they represent a rise of 2.6%, this equates to a 65% increase in the interest payments.

If you are concerned about the above situation, as ever, I am able to lead you through the mortgage maze. Just use the links to the right hand side to make contact with me.