David Fell of the Hamptons said more than half of buyers who close their mortgages this month will face higher interest rates.
“Essentially anyone who isn’t a first-time buyer approaching the end of a two-year deal is likely to see their monthly mortgage payments rise,” he said.
According to UK Finance, the banking trade organization, 1.3 million borrowers will close fixed-rate deals at some point this year.
However, those who bought with a 5 percent deposit will see their monthly mortgage payments fall by £ 30. This is because interest rates on low-deposit mortgages were extremely high during the pandemic, despite a record low bank interest rate. These homeowners will see their mortgage rates fall from 3.17% two years ago to 2.88%.
Homeowners who have made five-year fixed-rate deals will also see a drop in their costs. This is because mortgage rates five years ago were closer to today’s and because homeowners on these longer-term deals have had more time to make payments and reduce their total debt.
The average homeowner who has a five-year fixed-rate deal with a 25 per cent deposit will pay £ 504 less a year when he re-mortgages this month. But that saving is shrinking as the bank’s interest rate rises. If they had mortgaged before the last interest rate increase, they would have saved an extra £ 204. Hamptons’ calculations are based on a buyer who takes out a 25-year mortgage to buy a home at an average price and takes into account the additional equity accumulated during the fixed interest rate period.
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