The new figures from Impartial.co.uk shows that British homeowners with fixed rate mortgages are in for a £522 million hike in their annual mortgage costs within the next six months, unless they take action.
This is the estimated amount that mortgage costs will increase for the 1.2 million homeowners who are currently on fixed rate deals which are due to end within 6 months. It is not surprising that – with the withdrawal of many of the attractive fixed rate deals in recent months – two-thirds of those planning to remortgage their property in the next 6 months are not optimistic about securing similarly attractive mortgage deals.
Worryingly 13% – or 1.2 million – of those on a fixed rate mortgage are within 6 months of the end of their deal. At this time mortgage costs could increase as the homeowner will automatically switch to their lender's standard variable rate. According to the research, homeowners on fixed rates are paying 5.5%, 0.6% less than those on a standard variable rate. The average debt for those on fixed rates is £98,859. This could mean an increase of £522 million on mortgage costs assuming these 1.2 million people end up on their lenders standard variable rate.
Another startling finding is that one in five homeowners (21%) are paying their lender's standard variable rate. These homeowners are typically on a rate 0.5% higher than the two year fixed rate average according to the report – with average mortgage outstanding of £58,240 this means they could be paying as much as £705 million a year more than they would do on a fixed rate deal.
The report shows that 2.6 million are planning to remortgage in the next 6 months – but there appears to be little optimism about the prospect of refinancing their property. Only 31% scored themselves higher than 6 out of 10 in terms of how positive they feel about the process. Over half (53%) scored themselves 4 or less in terms of how they feel about re-mortgaging and 14% scored themselves 0 out of 10.
Karen Barrett, Marketing Director of Impartial.co.uk, commented: "The message from Impartial.co.uk's first Mortgage Waste comes through loud and clear. Confidence is low in the mortgage market – with so many of best deals gone since the start of the credit crunch a year ago – those that need to remortgage are worried about the prospect.”
