Borrowers who secured a two-year mortgage deal at a low fixed rate in 2017 could face paying more than double in interest when their deal expires if they do not remortgage.
According to number crunching by Moneyfacts.co.uk, rates on two-year fixed-rate mortgages fell to a record low of 2.2% back in October 2017. Meanwhile standard variable rates (SVRs) – the rates charged by lenders to customers whose deals have expired – are predicted to rise to 4.89%.
This means borrowers, who signed up to the two-year deals in October 2017 and who – instead of switching to a new mortgage – automatically revert to their lenders’ SVR will be paying more than double in October when their deal expires. In November 2017, the Bank of England increased the base rate from its ten-year low of 0.25% to 0.5% and this meant lenders began the following suit by hiking their own rates. Therefore, anyone signing up to a deal in the month preceding the hike would have benefited from record low rates.
But, this also means over the next six months many mortgage borrowers’ record-low interest rate will expire and therefore their mortgage will revert to a rate that could see their interest rate ‘double overnight’.