Homeowners on tracker mortgages face their repayments going up by this amount following a recent hike in interest rates. According to UK Finance, around 850,000 households have this type of deal and could be impacted by the recent increases.
Interest rates have risen multiple times over the last year due to the Bank of England hiking the country’s base rate multiple times.
While this has been a boon for savers, mortgage holders and people in debt have seen their repayments skyrocket.
Amid the ongoing cost of living crisis, families are nervous about whether they will be able to afford their mortgage in the months ahead.
In light of this, experts are sharing advice with households about what they can do to reduce their costs.
Pete Mugleston, the managing director of http://www.onlinemortgageadvisor.co.uk/, shared with Express.co.uk how homeowners will be affected by the continuous rate rises.
He explained: “How the interest rate rise will affect borrowers entirely depends on the mortgage deal they’re currently on.
“Those on a tracker mortgage will feel the impact almost immediately – with the average deal expected to see an increase of around £49 per month.
“In contrast, those on lenders’ standard variable rate will need to wait until they hear from their provider to know whether they will see an increase in their monthly repayments since the SVR rates are decided by lenders.
“That being said, standard variable rates typically do increase following a base rate rise.”
The mortgage expert emphasised that fixed-rate mortgage deals will not be affected in the short term by the rate hikes.
However, borrowers who have a deal coming to an end within the next six months may be impacted.
Anyone with a fixed term deal that is due to expire soon will likely find the rate they pay when they remortgage a lot higher than their current deal.”
According to the managing director, there are a number of options available to households who are set to struggle with their mortgage payments.
Mr Mugleston added: “You could also consider switching to an interest-only mortgage; while this is a short-term solution, it would make your mortgage costs a smaller monthly expense.
“If you’re still able to pay some part of your mortgage payments, another possibility might be extending your current mortgage term to reduce your repayments.
“That being said, if you’re completely unsure of what to do, your best option would be to speak directly to your lender.
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“They are best positioned to discuss your options and, at the very least, must offer you a solution.
“They’ll lay out all the options available to you and advise on which path might be the most suitable for you to go down.”
Further interest rates are likely as the Bank of England looks to further rein in inflation throughout the year.
The central bank’s Monetary Policy Committee is due to announce further changes to the base rate on March 23, 2023.
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