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Two-year deal expiries hit mortgage holders hard
Mon, 16 May 2005
Homeowners whose low fixed rate mortgages expire this year may be hit hard by higher mortgage payments .

The expiry of mortgages taken out two years ago comes at a time when many consumers are already struggling financially .

Economists however say that only three-quarters of the effect from the 1.25 per cent rise in interest rates since November 2003 have filtered through.

Director-general of the Council of Mortgage Lenders, Michael Coogan said there "a significant number of people" would be coming off two-year fixed rates .

"That is going to be a significant increase [in mortgage payments] to many individuals," he added.

Some 600,000 people took out fixed rate mortgages when the base rate was 3.5 per cent at the peak of the housing market boom.

Meanwhile, Capital Economics predicted that the average mortgage payment expiring in the first half of this year will go up by 24 per cent, or £130.

Likewise, UK economist at BNP Paribas, Alan Clarke, has called this imminent problem a "time bomb ticking".

Bank of England governor, Mervyn King, played down fears that this situation would have a broader impact on the economy.

He feels that the actually number of households facing such changes is "not large enough to make a difference for consumer spending as a whole".

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