More than 800,000 homeowners Face the shock of a double rate mortgage The Bank of England also warned that interest rates will remain high for years.
Citi analysts warned that mortgage holders who entered into new deals are more expensive Since the Bank of England started increasing borrowing costs In December 2021 another jump in housing costs could be affected when their current deals expire.
Analysts estimate that at least half of the 1.68 million households that remortgaged in the past year have taken two years of repairs.
These homeowners had to go from rates of 1.5 percent or 2 percent to new deals at about 4 percent—more than double what they used to.
However, they are likely to see another jump in payments when their deals expire in 2024 and 2025 as the Bank of England has warned interest rates could remain above 5% until 2026.
Andrew Wishart, who runs Capital Economics’ housing service, said: “There will be at least 800,000 families who remortgage between mid-2022 and mid-2023 who will refinance between 2024 and 2025.
“If their mortgage rates stay above 5%, they will see their rates increase further.”
Realtors said homeowners are nearing the end of fixed-rate deals Over the past 18 months, I have increasingly turned to short-term fixed-rate loans in the hope that interest rates will soon drop again.
David Hollingworth, of L&C Mortgages, said the proportion of homeowners who only maintain interest rates for two years has “dubbed broadly” as interest rates have risen.
“In the last 12 months, there has been a stark shift in the number of borrowers choosing two-year fixed rates,” Hollingworth said. “Last year it would have been about 30 per cent or less. This year that percentage has risen significantly to exceed 50 per cent.”
He added, “It would certainly be based on the hope that rates will come down again by the time their deals end.”
Predictions of how high interest rates will be and how long they will stay there steadily increasing this year.
City traders expect the bank rate to peak at 5.75%, up from 5.25% today, and to remain at 5.5% by August 2024.
370,000 households moved into new mortgage deals with different lenders in the 12 months to March 2023, while 1.3 million households entered into new deals with their existing lenders, according to data from UK Finance.