Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Global Warming ClImate Change Mega Death Trend - 8th Apr 24
Gold Is Rallying Again, But Silver Could Get REALLY Interesting - 8th Apr 24
Media Elite Belittle Inflation Struggles of Ordinary Americans - 8th Apr 24
Profit from the Roaring AI 2020's Tech Stocks Economic Boom - 8th Apr 24
Stock Market Election Year Five Nights at Freddy's - 7th Apr 24
It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- 7th Apr 24
AI Revolution and NVDA: Why Tough Going May Be Ahead - 7th Apr 24
Hidden cost of US homeownership just saw its biggest spike in 5 years - 7th Apr 24
What Happens To Gold Price If The Fed Doesn’t Cut Rates? - 7th Apr 24
The Fed is becoming increasingly divided on interest rates - 7th Apr 24
The Evils of Paper Money Have no End - 7th Apr 24
Stock Market Presidential Election Cycle Seasonal Trend Analysis - 3rd Apr 24
Stock Market Presidential Election Cycle Seasonal Trend - 2nd Apr 24
Dow Stock Market Annual Percent Change Analysis 2024 - 2nd Apr 24
Bitcoin S&P Pattern - 31st Mar 24
S&P Stock Market Correlating Seasonal Swings - 31st Mar 24
S&P SEASONAL ANALYSIS - 31st Mar 24
Here's a Dirty Little Secret: Federal Reserve Monetary Policy Is Still Loose - 31st Mar 24
Tandem Chairman Paul Pester on Fintech, AI, and the Future of Banking in the UK - 31st Mar 24
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

250,000 UK Fixed Rate Mortgages to Reset 3pcent Higher This Winter

Housing-Market / UK Housing Sep 08, 2007 - 09:36 AM GMT

By: Nationwide

Housing-Market Nationwide reveals that over 250,000 borrowers will see their two year fixed rate mortgage mature between October and December 2007 and are likely to see their average monthly payments increase by around £200* per month as lenders start to charge them their standard variable rate.


Two years ago, in Autumn 2005, fixed rates dipped to a low point, with an average rate for a two year deal being just 4.56%. If borrowers on these low rates don't take any action when their deal matures, they will automatically move onto a standard variable rate mortgage, with a current average rate of around 7.75%. This will lead to a rate increase of over 3%.

Even if these ‘rate shocked' borrowers remortgage to another two year fixed rate deal or try to secure a rate for a longer period they are still likely to experience an increase in payments. Since Autumn 2005, the average two year fixed rate has risen by over 1.80% from 4.56% to around 6.41%. On a £100,000 mortgage, this increase would cost customers an additional £110 per month.

In order to keep monthly repayments as low as possible, borrowers need to be choose their mortgage carefully. For example, a five year fixed rate with Halifax costs 6.89% compared to just 6.13% at Nationwide. Each month this difference in rate would cost borrowers £44. Over the five year deal period it would cost a borrower £2,675 more.**

Borrowers can often save money by switching to a new mortgage before their current deal ends. Many believe that to avoid early repayment charges they must wait until their deal expires before arranging a new fixed rate. However, Nationwide allows borrowers to switch to another Nationwide deal in the final three months of their fixed rate without any penalties. This avoids borrowers moving onto standard variable rates, which are usually higher than fixed rates.

Matthew Carter, Nationwide's director of mortgages, said: "For some borrowers it will come as a quite a fright to see their mortgage payments increase dramatically. To absorb some of this shock, borrowers need to consider remortgaging as soon as their deal ends, or beforehand if their lender allows it. Those who prefer to avoid the unexpected may be thinking about fixing for a longer period. Since the Bank of England base rate has been rising we have seen a great deal of interest in our longer term deals, including our 25 year fixed rate deal."

For further information please contact :

Zoe Stevens, tel: 01793 655423, email: zoe.stevens@nationwide.co.uk
Steve Blore, tel: 01793 655199, email: stevew.blore@nationwide.co.uk

Notes

*Based on an average loan size of £120,869, monthly mortgage payments would rise from £676 (based on a fixed rate of 4.56%) to £913 (based on typical SVR of 7.75%) – payment shock of £237.

** Savings are over the five year deal period of the mortgage and are based on a term of 18 years, a repayment loan of £102,282 at an LTV of 75%. Calculations assume reservation fees are paid upfront.

250,000 borrowers are due to come to the end of a two year fixed rate mortgage between October and December 2007 – figures sourced from CML.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in