Homeowners with average mortgages will pay £1,500 a year more in repayments because of interest rate rises over the past year. With another rise expected this week, those with a £150,000 mortgage could be paying up to £125 extra a month.
The increased payments threaten further pressure on an overheated housing market as homeowners struggle to keep up with large mortgage repayments. Anyone with an average interest-only tracker mortgage of £150,000, which mirrors the base rate, will have seen repayments increase by £94 a month following three rate rises in the past year. A 0.25 per cent increase on Thursday would cost another £31, said mortgage broker John Charcol. London will be hit the hardest. Here the average loan is £210,000 and on an interest-only tracker mortgage – where the interest but not the capital is paid off – monthly payments will be up £175 on a year ago.
On top of this, more than 2 million homeowners who are coming to the end of cheap two and three-year fixed-rate deals will see repayments rise by more than £1,000 a year if they revert to their lender’s standard rate, according to online mortgage broker mform.co.uk.
Mortgage misery as rate rises bite