Repossessions to rise as mortgage costs rocket

About 1million borrowers will see their mortgages rise by an average of £630 a year as lenders push up rates next month.

Householders on standard variable rates (SVR) will be hit by the increases, announced by a host of lenders – including part state-owned banks RBS, NatWest and Halifax. 

Already, two-year fixed-rate deals have gone up from an average low of 3.82 per cent in October to 4.15 per cent. A borrower with a £150,000 mortgage has seen more than £320 added to their annual repayments, said website MoneySupermarket. 

Mortgage consultant Dominik Lipnicki, of Your Mortgage Decisions, told Metro banks would become ‘more aggressive’ and added borrowers on SVR deals were ‘at the mercy of lenders’ since the deals were not tied to the Bank of England base rate.   

He said: ‘Many households are on the brink, which is why defaults are growing and some people are using their credit cards or even pay day loans to pay their mortgages.’ 

Clare Francis from MoneySupermarket said tracker deals were a ‘safer option’ than SVR mortgages. ‘Economists expect the base rate to remain at 0.5 per cent,’ she said. 

‘Tracker mortgages are directly linked to base rate so any changes directly mirror moves in the Bank of England base rate.’ 

The Council of Mortgage Lenders said the cost of raising mortgages on the wholesale market had increased since 2011 and forecast 45,000 homes will be repossessed this year, compared with 36,200 in 2011.

©Metro