More than 1.4 million households face higher fixed-rate mortgage bills this year | Business news

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According to official figures, more than 1.4 million fixed-rate mortgage customers face the prospect of significant increases in their monthly payments when their deals expire this year.

The Office for National Statistics (ONS) said 57% of those arriving for renewal in 2023 were fixed at interest rates below 2%.

It added that deals due to mature next year would be two-year fixed-rate loans offered in 2022 and five-year fixed-rate deals struck in 2019, when “mortgage rates were generally above 2%.” .

Its report on housing costs, using Bank of England data on transactions, showed that 353,000 fixed-rate mortgages were due to be renewed during the first three months of 2023.

This comes as the cost of a term home loan continues to recover from the peak seen – well above 6% – last fall when the market suffered a shock at the hands of the then government.

Households subject to standard and variable deals have had higher bills for more than a year – reflecting the rise in the cost of borrowing imposed by the Bank through higher interest rates to curb inflation.

Economists added that the energy-led surge in the cost of living has added to a variety of bills – slashing consumers’ spending power and leaving the country on the brink of recession.

However, fixed-rate mortgage costs have been hit by a special target, rising sharply in the wake of the Les Truss government’s inexpensive mini-budget that spooked financial markets.

The chaos has driven up the cost of term mortgage deals with lenders temporarily pulling products to ensure they reflect higher financing costs.

Moneyfacts.co.uk financial information service data on Monday showed average two-year fixed rates at 5.75% – down to 5.57% for five-year deals.

Both stood above 4% in early September – weeks before the now defunct growth plan was unveiled.

The Bank of England warned last month that homeowners faced an annual £3,000 increase in mortgage bills – exacerbating the cost of living crisis.

Threadneedle Street policymakers are widely expected to raise the bank rate further – from its current level of 3.5% – in the first half of 2023 in a bid to maintain pressure on inflation.

An analysis by the Resolution Foundation think tank, released separately on Monday, indicated that families have suffered only half of the lost income they are expected to bear so far due to rising costs.

Myron Jobson, senior personal finance analyst at Interactive Investor, said: “Housing costs are breaking through and are set to become even more expensive for many Brits in the coming months.

“Housing is the biggest expense for most families, so even a modest percentage in these costs can translate into a significant sum in pounds and pennies.

“The rise in interest rates over the past year has signaled the end of the golden age of cheap mortgages.

“Home loans are at levels not seen since the financial crisis, and the specter of further base rate increases is expected to add misery to savvy homeowners and mortgage holders alike as household balance sheets teeter from cost-of-living pressures on finances.” .

A spokesperson for UK Finance, the trade association for loans, said: “Lenders are ready to help customers who may be struggling with mortgage payments, with a range of tailored support available.

“Anyone concerned about their finances should contact the lender as soon as possible to discuss options for assistance.”

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