That will include almost £83 million in the first month alone after a rate rise.
About 25% of all UK mortgages borrowers, or 5 million British households, are currently paying their lenders’ standard variable rate, which averages 3.99%, according to UK Finance.
The figures come as speculation mounts that the Bank of England’s Monetary Policy Committee will vote to raise interest rates as soon as next month in light of rising inflation, while some lenders have already started withdrawing their lowest rates.
Mortgage lender TSB has published figures outlining the increase in monthly payments borrowers will be faced with when interest rates do rise.
For a mortgage of £100,000 over 20 year a 0.25% rise from 3.74% to 3.99% would result in paying £13.09 more a month, for a £125,000 loan it would be an extra £16.36, for £150,000 it would go up by £19.63, for a £175,000 it would be a rise of £22.90 and for £200,000 the monthly payment would rise by £26.17.
While these increases are modest, for borrowers who are already struggling they could be the final straw, making their mortgage unaffordable. The problem is also likely to be cumulative, with borrowers facing further increases in their repayments as the Bank pushes rates up over the next few years.
According to TSB, a survey of its customers has shown that most are not prepared to deal with the effects of a rate rise, with 68% saying they did not understand how it would affect them.
How we can help
If you’re concerned about how an increase in interest rates could affect your ability to pay your mortgage, contact Negative Equity UK now.
Whatever your circumstances, the first step to dealing with your property debt is to contact us for an initial free, no obligation consultation with one of our advisers. In September alone we wrote off a total of £1,287,323 of unaffordable mortgage debt for our clients.
Take a look at our reviews and call us on 0161 631 2727 or go to our website and arrange for us to call you at a time that suits you.