Repayments of Mortgage to rise by £33m per month

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Almost 180,000 people who took out two year fixed rate mortgages during the second quarter of 2005 are facing an increased monthly mortgage bill of an average of £185 per month, as the fixed rate period of their loans come to an end and base rate rises hike the standard variable rate of many mainstream mortgage lenders.

Mortgage Advice Bureau (MAB) estimates that 178,800 people who took out mortgages in 2005 will face mortgage repayment increases totalling £33.08m a month as they come to the end of their fixed rate deals and move onto their lenders SVR rate this month, with further increases possible if the base rate rises again this Thursday.

On a typical £100, 000 capital and interest repayment 25 year loan, the interest rate on people's loans will increase from typical fixed rates of 4.39% (Moneyfacts 2nd June 2005) to the current average SVR rate of 7.40%(Moneyfacts, correct as of 24th May 2007). This means that monthly repayments will increase by £185 or 33% from £556 to £741.

Should the base rate rise by a quarter point next week, MAB estimate that monthly repayments will increase to £201 or 36% from £556 to £757 and will increase further to £217 should the base rate rise to 6% during the year as predicted by many city analysts.
If you have any comments you would like to add to this story or would like to speak to Mortgage Solutions about a similar subject, telephone Andrea Tryphonides on 020 7004 7455 or email andrea.tryphonides@incisivemedia.com - Source: Incisive Media Investments Copyright 2007

Armen Hareyan's picture

Posted June 4th, 2007 by Armen Hareyan