A new mortgage peril, looms on the horizon.
According to a new report issued by financial services group Credit Suisse, up to 1 million fixed rate mortgage borrowers could see a dramatic rise in their monthly repayments as numerous cut-price offers draw to an end.
Fixed rate mortgages offer “budget conscious” consumers peace of mind, as repayments are not directly tied to interest rates and are not prone to fluctuate as a result. However, recent studies have revealed that literally thousands of plans are approaching renewal date, and borrowers will be forced to switch to less attractive plans, incurring far higher rates of interest.
Fixed rate mortgages have gained massive popularity over the last 2 years with approximately 20% of all active mortgages falling into this category. However, interest rates have also increased considerably over the last 2 years and many “post” fixed rate borrowers could incur up to 30% rises in monthly repayments as a result.
Numerous consumer groups fear that many families will suffer as a result of the switch, with a large majority of working class families already struggling to make ends meet. Could this be the next set of victims to stem from our current financial climate? Only time will tell.
