Huge hikes due for some homeowners due to end of special deals

A recent report has shown how many homeowners could be facing huge hikes in their mortgage repayments, as their special low cost mortgage deals draw to an end. Once these cheap deals, such as low rate fixed rate mortgages that were fixed for a set period, come to an end, many borrowers may be forced to move to the lender’s standard variable rate, which is likely to be far higher.

Officials state that many homeowners are in a catch 22 situation, as those who do try and look for another deal will have to face crippling arrangement fees and charges and those who switch to their lender’s SVR will find that their monthly repayments will probably rocket.

One industry official said: ‘In the old days, competitive mortgage rates were typically available to anybody with more than five% equity. Now to get the best rates you need 25% or more.’

However, another said that in some cases customers may prefer to simply switch to their lender’s SVR despite the rate increase.

He said: ‘The advantage of the SVR is that there is no fee to pay - and with some fixed and discounted deals coming with fees of about £1,000 or more, it is easy to see why some borrowers prefer their lender’s SVR for now. The idea is that once a competitive fix or discount becomes available the borrower can then move on to that without paying a penalty or having to give any notice.’