Figures from the Financial Conduct Authority (FCA) show that almost 500,000 fixed-rate mortgages will come to an end between November and January.
As a result of higher interest rates, the vast majority of those having to remortgage will see their monthly bills rocket.
Here, we unpack the looming mortgage crunch and offer advice to those needing to secure a new deal.
How many fixed-rate deals are ending?
January 2024 will be the busiest month for remortgagers, with 191,913 fixed term deals expiring.
In what is already the most expensive time of the year for many consumers, the mortgage crunch will leave a big dent in thousands of homeowners' finances.
What's happening to mortgage rates?
Data from financial analyst Moneyfacts shows that rate rises are much higher than in previous years.
Competition among lenders to offer chart-topping rates has been increasing over the past week, but significant movement is not expected over the coming weeks and months.
This graph shows how the average fixed rate for two-year and five-year deals has fluctuated over the past 24 months. It also shows how continual base rate hikes have impacted prices.
What difference do higher mortgage rates make?
The average mortgage holder has £147,000 left to pay off, according to the FCA.
In September 2021, someone taking out a two-year fix with 20 years left on a loan of that size would, on average, have paid £770 a month. But someone in that same scenario today would be paying £1,106 a month - a £336 difference, which equates to £4,032 extra annually.
Find out moreWhat to do if you need to remortgage
In such a high-interest environment, it pays to be aware of the best steps to take when you need to refinance.
Find out when your current deal ends: Work out your current loan-to-value (LTV): Consider overpaying on your existing deal:Get a quote from your current lender: Research deals from other lenders and take independent advice: Don't fall onto your lender's standard variable rate (SVR):Decide on a mortgage term (eg two year or five year): Keep an eye out for any additional fees: Lock in a rate:Which? calls for strong mortgage support
The consumer champion is urging mortgage lenders to offer appropriate customer service support - via phone calls, email and chat support - during the Christmas holiday period.
Those concerned about their ability to make mortgage repayments should contact their lender in the first instance. Doing so will not affect their credit score.
Support could include a temporary mortgage holiday, temporarily paying only the interest on the mortgage (and not the capital repayment), or extending the term of your mortgage.
The FCA’s new Consumer Duty, which holds firms in financial services to higher standards of customer service, should mean that customers are supported in a way that meets their financial needs. Companies that fail to do so should expect to face tough action from the regulator.
source https://www.which.co.uk/news/article/christmas-could-bring-mortgage-misery-to-500000-homeowners-asQaj9X2Zr06