Salisbury mortgage adviser says future deals could be ‘significantly different’
Payments for renewed deals could differ by more than £300
A mortgage adviser in Salisbury says homeowners could be paying as much as £340 more on a new deal as interest rates have reached a two-decade high.
The average two-year fixed rate is now above 6%, the highest since the year 2000.
Suzie Iles, of Independent Mortgage Advisers McFarland and Iles, is warning people whose mortgage is up for renewal that the difference between their current and new agreements could be ‘significantly different’.
“Say the average mortgage is about £200,000 and you put on a 2% rate. If you went on to another 2% rate today, you'd be looking over a 25-year term, at an increase of around £340, which is an awful lot for a lot of people,” she told us.
There is set to be more gloom later this week, as the Bank of England are expected put base rates up again on Thursday.
Can anything be done to help?
There are some ways to reduce the financial pain for homeowners, as Suzie explained to us.
One way would be for lenders to take their term up to 75.
“It's not ideal because obviously if you keep it at that term, then you're going to pay more overall. But for the average family, let's say that they've got two small children and are worried, then if they took their mortgage to age 70 or 75 and then reduce the term back later when finances were allowed, it may help us just get over this hump now,” Suzie said.
She added another alternative: “Some lenders may look at letting you go on an interest only basis, but again that's not ideal because you still owe the capital at the end.”
Suzie told us that her clients are being advised to overpay if they are in fixed rates that run to next year, as that improves the impact when it comes to renewing.
Another option, for those with savings, would be to make a lump sum reduction to make it into a lower loan to value bracket.
No help from the Government on the way
With hundreds of thousands of households about to be plunged into further misery, Prime Minister Rishi Sunak has ruled out help being made available.
Suzie says the Government needs to do more: “In the past we've given some different incentives like when they took away the stamp duty for a period that helps customers. But yeah, there's got to be something that that they put in place because this is affecting so many people.”
Speaking to ITV's Good Morning Britain, Mr Sunak said: “I know the anxiety people will have about the mortgage rates, that is why the first priority I set out at the beginning of the year was to halve inflation because that is the best and most important way that we can keep costs and interest rates down for people.”
The PM did say that there is support available to people such as the mortgage guarantee scheme for first time buyers and the support for mortgage interest scheme.