Mortgage Advice Bureau (MAB) has estimated 346,000 people who took out two-year fixed rate mortgages in 2003, when interest rates were at record levels, will be affected with the increased bill of £52.53 million when the fixed rate period of their loan comes to an end.
On a typical £100,000 capital and interest repayment 25-year loan, the interest rate on their loans is increasing from an average fixed rate of 4.23 per cent to the current Standard Variable Rate of 6.75 per cent.
This means that the monthly repayments increase by £152 or 27 per cent from £547 to £699.
Brian Murphy, lending manager at MAB, said: “While homebuyers who take out fixed rate mortgages in 2003 benefited from the lowest interest rates in more than a generation, the increase in monthly cost as their fixed rate reverts to the SVR is severe.
“Although a mortgage illustration at the time the loan was taken out may have demonstrated the effect of a 1 per cent increase in rates, many clients will be shocked at the automatic increase that they will have to pay.”
Ian Giles, marketing director at Purely Mortgages, said: “Thousands of homeowners are coming off some of the cheapest ever fixed-rate deals; brokers should be prepared for plenty of remortgage enquiries.”
Rod Murdison. proprietor of Murdison & Browning, said: “The main stay of business at the moment is remortgages. The public are gradually becoming aware that lender loyalty means little and they are missing a trick if they don’t cast their web further afield.”
