Homeowners are facing a £23,000 rise in interest payments after rates hit a 15-year high, according to new analysis.
The average interest rate for a five-year fixed-term mortgage now sits at 5.83%, up from 5.17%, since the start of June, Moneyfacts data shows.
This follows the Bank of England’s decision to increase rates by 0.5% to 5% last week.
It means the average homebuyer who is looking for new five-year fixed mortgage faces possible interest payments of £23,000 over that period, according to analysis by property lending experts Octane Capital.
Read more: Mortgage crisis: 'My monthly payment has gone up by £480. It's horrific'
In 2018, the average homebuyer secured a five-year fixed term at an average rate of 1.99%, which saw them pay £725 per month or £43,505 over the term, with £15,704 interest.
But if they’re looking to remortgage today on another five-year fixed term on the remaining balance, their average monthly mortgage repayment would jump by £289 per month.
The full cost of their mortgage during their second five-year term would jump to £60,829 - despite them borrowing less - with interest increasing by £23,117.
Read more: Mortgage rates: What the banks are offering following interest hikes
The report adds that based on the current average house price of £286,489 and a 25-year term mortgage at a 75% loan to value, the average homebuyer was facing a monthly mortgage repayment of £1,362 - a jump of £85 per month from the beginning of June.
The research follows recent warnings that 1.4 million mortgage holders will lose at least a fifth of their disposable income in additional repayments as a result.
They are set to rise by £2,900 for the average household remortgaging next year, according to economists at the Resolution Foundation.
Watch: Mortgage crisis set to deepen as interest rates hit 5% for first time in nearly 15 years
Latest news on the mortgage crisis
With the mortgage crisis seemingly set to worsen in the coming months and years, Chancellor Jeremy Hunt this week said he was “working on a solution” to ensure banks act quicker to pass on interest rate rises to savers.
He said he told bank bosses in “no uncertain terms” that there is an issue after acknowledging it is currently “taking too long” for them to pass on the changes to savers.
Hunt has already agreed with lenders that mortgage holders struggling with repayments will be given a 12-month grace period before repossessions begin, with borrowers also able to extend the term of their mortgages or move to an interest-only plan temporarily “no questions asked”.
On Tuesday, Labour will force a Commons vote on the party’s proposals to ease the mortgage crisis, urging Tory MPs to “take responsibility” and back the plan.
Labour’s plan would see banks forced to help mortgage holders struggling with payments, with the party urging the government to compel lenders to allow borrowers to temporarily switch to interest-only payments or lengthen their mortgage period.
Meanwhile, Consumer champion Martin Lewis said it will be a “nightmare year” for some, as people deal with rising mortgage or rental costs.
The MoneySavingExpert.com founder told Good Morning Britain he expects to see increases in mortgage arrears and some people selling up.
Mortgage crisis: Read more
"payment" - Google News
June 28, 2023 at 12:37AM
https://ift.tt/UVpBT4W
Mortgage crisis: Homeowners 'face £23000 rise in interest payments' - Yahoo! Voices
"payment" - Google News
https://ift.tt/c26YtUZ
https://ift.tt/DQnbBlm
Bagikan Berita Ini
0 Response to "Mortgage crisis: Homeowners 'face 23000 rise in interest payments' - Yahoo! Voices"
Post a Comment