UK homeowners are bracing for a mortgage shock as fixed-rate deals come to an end, with over 1.6 million potentially facing steep payment hikes in 2024.
Enjoying low interest rates for years, many will be hit hard by the Bank of England’s recent rate rises, which have seen average two-year fixed mortgage rates soar above 5.5% by July 2024, and some variable rates climbing to 9.49%.
The looming end of their fixed terms could mean hundreds more in monthly costs, putting pressure on family finances.
Alastair Douglas, CEO of TotallyMoney, commented on the situation: “For 13 years, the Bank of England kept the base rate locked below 1%, and the thought of it suddenly ramping up to 5.25% was almost unimaginable,” adding that “People became used to cheap money – and rock bottom rates helped drive up property prices.”
With UK house prices having surged over 20% from 2020 to 2022, according to the Office for National Statistics, the sharp turnaround in interest rates is leaving many exposed, reports the Express.
The financial research firm Moneyfacts has revealed that the average two-year fixed mortgage rate has soared from a mere 1.99% in July 2022 to a staggering 5.52% by June 2024, following the Bank of England’s aggressive interest rate hikes from 0.1% to 5.25% in an attempt to tackle high inflation.
Homeowners across the UK are steeling themselves for a significant hit to their finances as the Bank’s Monetary Policy Committee is expected to maintain high rates throughout 2024 to keep inflation in check.
“Now the average two-year fixed-rate is more than 5.50% and standard variable rates are as high as 9.49%,” Douglas cautioned. “Anybody now rolling off an old deal is likely to be in for a shock when their mortgage payments suddenly skyrocket.”
With the looming mortgage rate hike on the horizon, industry experts are advising homeowners to take action immediately, suggesting they consider remortgaging sooner or looking into other avenues such as extending their current fixed term to mitigate the impact.
