Millions face increase in mortgage payments

March 16, 2017 by Brendan

Lenders

According to Moneyfacts, the financial data website, millions of borrowers are about to see their mortgage payments sky rocket, by around £2,000 a year.

Moneyfacts stated that borrowers who were approved for a two-year fixed rate deal a couple of years ago will soon be due to go onto the lender’s Standard Variable Rate, which could be far higher than the introductory rate of interest. The website also stated that average monthly bills may increase by around £163 a month.

The Standard Variable Rate (SVR) can be altered by lenders at any time, despite what the Bank of England base rate is at that time. According to Moneyfacts, lenders were facing fierce competition around two years ago, all offering some of the best value deals at the time. The average SVR at that time was 3.41%, which fell further to 3.06% in 2015. However, the average SVR has now increased to 4.56%, adding far more to the monthly mortgage payment.

To ensure that borrowers get the very best deal, it is advisable to compare the various deals and sign up to a new fixed rate or other deal, so that you know what your monthly repayments will be and minimise costs.

However, to help people decide which deal offers the best value long term, mortgage advisers study on a CeMAP course to learn how to calculate the true costs of various deals. Some mortgage deals may have the lowest rate of interest, but have extra fees attached, which can add thousands to the long term cost.