One of the country's leading mortgage lenders is warning that 200,000 homeowners could face a serious "mortgage shock" later this year which will result in them paying more interest.
The higher rates have been introduced due to the Bank of England’s decision to hike the base rate to address inflation and the wider cost-of-living crisis.
The CEO of the banking group, Charlie Nunn, confirmed a "mortgage shock" was awaiting 200,000 of its home loan customers.
It's not looking good for those looking to get on the property ladder
Yui Mok
Nunn said 10 per cent of its mortgage customers were due to exit a fixed-rate deal in 2023.
“What we're really focused on as a bank is looking at those customers that are going to have an increase in their mortgage payments which is going to increase the interest they pay as a percentage of their income," he told Sky News.
"There's less than one per cent of our customers that we think are going to have a mortgage interest shock like that and what we've been doing is quietly reaching out to them."
He added: "There’s about 200,000 people we have been reaching out to and we're focused on those customers who are going to have that increase which could make it difficult for them to make ends meet.”
The chief executive reiterated the banking group was actively speaking to affected households to address issues around affordability as interest rates rise.
As it stands, the base rate is at four per cent but is expected to go up even more which means another interest rate increase is on the horizon.
Experts have warned if inflation continues around the level it is currently, mortgage holders should expect more interest rate rises in the future.
The latest inflation figures show the rate at 10.1 percent, which is high, but lower than in previous months.
Joe Giddens
Danni Hewson, AJ Bell’s financial analyst, previously warned as many as 1.4 million Brits could be in for a "mortgage interest shock” this year.
The finance expert said: “According to ONS figures, more than 1.4 million people have a fixed rate mortgage which will be up for renewal over the next year.
“The question many homeowners have been asking is whether they should hold off re-fixing until rates come down and instead go for a variable rate or a tracker mortgage.
“Every situation will be different, so the best course of action will be to talk to a broker to get the right advice for you."
