"Expectations are that if rates do come down, it might only be by half a percent this year. And it’s likely we won’t see rates the same kind of rates which were available in 2022 for some time."
- Alastair Douglas, CEO of TotallyMoney
Ahead of the Monetary Policy Committee meeting on Thursday August 1st, new research shows that each day, more than 4,000 homeowners are seeing their fixed rate mortgage comes to an end.
TotallyMoney has investigated the impact of the Bank of England’s interest rate hikes, and the financial shock still being faced by thousands of homeowners every day.
The average five-year fixed mortgage now sits at 5.49%, up from 1.70% in 2019.
Customers who don’t lock in a new deal will lapse onto their lender’s SVR, which currently averages at 7.5%, while some high street banks will charge as much as 9.24%.
Customers making repayments on the average home would previously have been paying £714 per month in mortgage repayments, but could now pay £1,004 (£3,480 more p/a) on the average two-year fix, £956 (£2,904 more p/a) on the average five-year fix, or £1,121 (£4,884 more p/a) on the average SVR.
As a result, mortgage arrears cases are expected to rise from 105,600 in 2023, to 128,800 by the end of 2024.
Alastair Douglas, CEO of TotallyMoney, commented: “While homeowners up and down the country will be hoping for an interest rate cut next week, we shouldn’t hold our breaths for anything too dramatic. The rate setters are worried that inflation could creep back up, and are acting with caution. Expectations are that if rates do come down, it might only be by half a percent this year. And it’s likely we won’t see rates the same kind of rates which were available in 2022 for some time.
“Every day, more than 4,000 homeowners face a fresh financial shock when their existing cheap mortgage offer comes to an end. The options are then; lock in a new deal, paying almost double the interest rate, and potentially incurring product fees of £1,000 — or move onto the SVR, which can be as high as 9.49%."
