Britain is experiencing consecutive increases in rates of interest that are placing serious financial pressure on households. While savers are benefiting from these rate hikes, homeowners are seeing their mortgage payments shoot up. Recent data from the Office for National Statistics (ONS) has revealed that 1.4 million households are facing the fact of upper rates of interest in 2023 as they renew their fixed rate mortgages.
Inside the first quarter of this yr, 353,000 fixed rate mortgages for homes could have to be renewed.
The ONS estimates, based on Bank of England transitions data, forecasts the variety of fixed rate mortgage deals coming to an end in 2023 will peak at 371,000 by the second quarter.
Moreover, this Bank of England data also highlights that almost all mortgages within the UK are agreed at a hard and fast rate.
Some 86 percent of outstanding UK mortgages were repaid at fixed rates of interest within the third quarter of 2023.
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Around 57 percent of those actively looking for a recent deal within the Latest 12 months are currently paying lower than two percent.
That is despite the indisputable fact that existing mortgage deals presently available on the market are closer to 6 percent.
In keeping with Hargreaves Lansdown, the common one who chooses to remortgage can pay £250 a month more on their recent fixed rate deal.
Many households are currently deciding whether to remortgage now or keep on with those returning to the SVR and waiting for fixed rates to drop.
Rates of interest have been raised as a consequence of the Bank of England’s decision to hike the nation’s base rate nine times in a row.
Because it stands, the UK’s base rate is at 3.5 percent in an try and mitigate the damage of rampant inflation on the economy.
Mortgage holders have needed to bear the brunt of this difficult decision with 1.4 million now facing an annual payment rise of £3,000 for his or her home.
Sarah Coles, a senior personal finance analyst at Hargreaves Lansdown, outlined the “unpleasant shock” awaiting families up and down the country.
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Ms Coles added: “If the speed on a £100,000 repayment mortgage rose from two percent to 6 percent, monthly costs would rise £220 to £644. With a 300,000 mortgage, they’d rise £661 to £1,933.
“It’s why the HL Savings & Resilience Barometer, out today, shows that Generation Z and Millennial homeowners are going to be hit particularly hard – with their savings dwindling and consumer debt mounting.
“They’re more more likely to have bought more recently, when house prices were higher, so could have greater mortgages to finance.
“Many will only ever have borrowed at a time of rock-bottom rates, in order that they’ve never faced mortgage payments on this scale.”