Ed: More indications of the 'Debt Disaster' facing our society.
[...] Credit Suisse estimates around a fifth of UK mortgages switched to fixed-rate deals in 2005, many after an interest rate cut in August of that year.
With most of those deals taken for two or three years, they are set to expire in the coming months. Following a steady rise in the Bank of England base rate, any new agreements will further taxing already strained household finances.
The best fixed rate deals in 2005 were typically around 4.5 per cent, but now comparable deals have risen to 5.5 per cent with rates predicted to rise again in coming months.
On those terms, a homeowner with a £300,000 repayment mortgage over 25 years, would see monthly repayments leap 10 per cent or £174 from £1,668 to £1,842.
Those on interest-only mortgages would be harder hit and see repayments on a similar sum jump 22 per cent from £1,125 to £1,375.
Jonathan Pierce, banks analyst at Credit Suisse, said: "For some customers we see a 25-30 per cent increase in interest payments."
He added that the payment shock could lead to more households pushed into arrears, particularly those who have already stretched themselves to get on the housing ladder. Read more