Fixed rate homeowners facing high interest rates

07/06/2007

Mortgage holders with a fixed rate deal are being warned to witness an arrangement fee and pay higher repayments towards the end of their deals.

Homeowners which took on a two-year fixed rate mortgage deal during 2005 would have seen their monthly mortgage repayments rise nearly three times if they choose to switch to a standard variable rate(SVR).

The Mortgage Advice Bureau concluded that around April and June 2005, 178,000 people took on a two-year fixed deal.

The finest fixed rate deal around 2005 was 4.49%, this is very low compared with today’s current average SVR which is 7.40 per cent.

Managing director of Mortgage Force Rob Clifford, spoke further, “The payment shock for some people will be significant.

“Not many people can afford a monthly cost rise of 25%. But I do not think we will see the number of arrears going up.”

Mr Clifford added, “A borrower should look at what their existing lender is willing to offer. But be warned, even existing lenders may have an arrangement fee.”

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