As more fixed mortgages get set to convert to variable loans, experts are worried that the housing market is in for a shock. Although many homebuyers were convinced that a limited fixed mortgage deal was the best for that time, now that the rates are changing, their payments may skyrocket. Nearly three million fixed mortgages may be affected.
“It is an extremely worrying time for anyone coming to the end of a fixed rate deal,” says Darren Cook, mortgage expert at Moneyfacts. “Borrowers coming to the end of a three year fixed rate deal, looking to fix for another three years could see a £158.23 increase in their monthly repayments (on a £150K mortgage), equating to an additional £5,896.28 in true cost over the three years.”
“There are still a handful of sub 6 percent deals, but these come with such high fees that any benefit from having the slightly lower rate is likely to be wiped out by the fee,” added Cook.
“There doesn’t appear to be any let up in the misery for borrowers. Lenders need to start playing the game fairly and pass on the cut in swap rates as quickly as they pass on the increase.”
Related reading: Fixed Mortgage
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