The lender said that over a quarter of a million people would see their two-year deal end between October and December 2007 and would find their monthly payments increase by around £200 a month on standard variable rate (SVR).
Rates in Autumn 2005 averaged 4.56 per cent and Nationwide warned borrowers that unless they remortgaged they would automatically move to an SVR that currently averages 7.75 per cent – an increase of over 3 per cent.
Nationwide cautioned that even by remortgaging, borrowers would still encounter increased payments in light of the average fixed rate having risen to 6.41 per cent.
Matthew Carter, Nationwide’s director of mortgages, said: “For some it will come as a fright to see their mortgage payments increase dramatically. Borrowers need to consider remortgaging as soon as their deal ends.”
Alan Lakey, partner at Highclere Financial Services, said: “I don’t think people understand the size of the problem. We will definitely see an increase in arrears as a result.”
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