Over 2.5 million UK homeowners who will have to renegotiate their mortgage over the next two years face paying £9bn more as interest rates jump.
With the Bank of England (BoE) now more likely to raise rates even higher than previously thought, Cebr said it now expects the two-year (75% LTV) mortgage rate to tick up and average 5.1% in 2023.
This means the 2.5 million mortgages that have been or are due to be renegotiated over 2023 and 2024, will cost several pounds month each month as cheaper rates have vanished from the property market.
The cost of some mortgages have risen by up to 3.5 percentage points for some households.
This adds on top of the estimated 1 million already exposed to mortgage increases because of their variable rate deals.
Read more: Banks tweak mortgage offers anticipating interest rate rises
Banks have been left looking at their options as the volume of customers in need of support during the cost of living crisis has increased, and people try to lock in better mortgage deals.
The next interest rate announcement is set to take place later in June, with predictions that the BoE will raise rates higher than previously forecast from their current 4.5%, set last month, to up to 5.5%.
Mortgage rates have been rising since data last month showed that inflation was not coming down as quickly as expected.
Cebr is expecting mortgage rates to average 5.1% in 2023 and 4.6% in 2024, bringing even more financial misery to already struggling UK households.
“Cebr estimates that mortgage holders looking to renegotiate their deal in the next two years will face a hefty £8.7bn increase in their payments as a direct result of tighter monetary policy,” it said.
London will see the largest rise in aggregate cost for refixers, with mortgage costs up by £1.8bn over 2023 and 2024, a symptom of the £530,000 average price for a home in the capital compared to the UK average of £282,000.
Read more: Mortgage costs driving buyers to 35-year loans to keep payments affordable
Meanwhile, refixers in the South East will see the next highest rise in payments, up £1.7bn in 2023. This is partly due to the higher-than-average house prices but also down to the fact that the region held the largest share of all mortgages in the UK in 2022, at 15%.
At the other end of the scale, Northern Ireland and the North East are expected to see the lowest increase in mortgage payments for those due to refix up to the end of 2024. Cebr estimates refixers in Northern Ireland will see a £126m increase in mortgage costs, while in the North East this increase will amount to £159m.
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