750,000 UK Households Face Mortgage Hike Nightmare

Hundreds of thousands of homeowners are facing significant mortgage hikes this year due to rising global uncertainty and inflation fears. According to Bank of England figures, around 750,000 households whose fixed-rate deals are set to expire in 2023 are currently paying rates below 3%.

However, lenders have begun increasing mortgage rates since July, with the average two-year fixed rate rising by 0.11% to 5.63%, and the average five-year fix increasing by 0.14% to 5.66%. This has led to an average repayment increase of £170 per month for homeowners.

Many of those facing price hikes are coming off five-year deals taken out in 2021, when competitive rates below 3% were available throughout the year. For example, if a homeowner had £110,000 left on their mortgage with a 25-year term and a fixed rate of 2.9%, their monthly payments would increase from £516 to £686 per month if their rate increased to 5.66%.

Lenders base their mortgage pricing on swap rates, which have risen due to global uncertainty and inflation fears. However, some lenders are starting to cut rates again, with NatWest making over 200 rate cuts across its new business range today.