More than 115,000 homeowners with fixed-rate mortgages ending this year could face higher costs
06.07.2022 - 16:53
/ dailyrecord.co.uk
UK Finance analysis suggests that homeowners coming off fixed-rate mortgages this year and shifting to a new deal can typically expect to see their disposable incomes shrink by seven per cent. The trade association said some 1.3 million customers are set to reach the end of their fixed-rate deals this year and, unless they remortgage, they will move on to their lender's standard variable rate (SVR).
The expected decrease in the amount of income that households will have left over to spend and save at their discretion is due to a combination of rising mortgage interest rates and the surging cost of living. UK Finance said it is expecting some upwards pressure on mortgage arrears as outgoing costs increase, particularly among households on lower incomes.
A ‘trends in the economy and lending’ analysis paper published by UK Finance said: "On average, we estimate the combined impact of cost-of-living and re-mortgage onto a new deal would result in around a 7% decrease in their free disposable income."
The impacts vary significantly, depending on when the previous mortgage was taken out, UK Finance said. Five and two-year fixed-rate deals account for around two-thirds of those fixed rates maturing in 2022.
UK Finance estimates around nine per cent of those whose fixed rates are due to end this year, or around 117,000 borrowers, will have less than 10 per cent of their income left over as disposable income after moving to a new deal.
Its document said: "Although these borrowers' re-mortgaging options on the open market may be more limited, the widespread availability of internal product transfer deals mean almost all will be able to access a new mortgage deal at competitive rates."
A further 20 per cent would have between 10 and
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