Nationwide urges borrowers to prepare for ‘rate shock’

More than a quarter of a million mortgage borrowers will see their fixed-rate period expire towards the end of this year, a building society has revealed.

According to Nationwide, some of these borrowers will be in for a “rate shock” as a new higher interest rate forces their monthly payments up.

The building society claims that moving to the average standard variable rate could cost mortgagees up to £200 a month more.

Two years ago, fixed-rate deals were available for around 4.5 per cent APR, whereas the current standard variable rate averages around 7.75 per cent.

Matthew Carter, Nationwide’s director of mortgages, said: “For some borrowers it will come as a quite a fright to see their mortgage payments increase dramatically.

To absorb some of this shock, borrowers need to consider remortgaging as soon as their deal ends, or beforehand if their lender allows it.”

Meanwhile, a spokesman for Abbey noted that the south-east is the area most likely to be affected.

In 2005, nearly half of all fixed-rate mortgages were taken out in that region, a spokesman revealed.

© Adfero Ltd

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