Cost of fixed-rate mortgages soars

3:19am Friday 16th May 2008

Homeowners refinancing their mortgage face the highest fixed-rates deals since the start of the decade, it was reported.

Figures compiled by personal finance website MoneyFacts and carried in the Daily Telegraph show that the average rate for a two-year loan has hit 6.64 per cent, up from 4.34 per cent two years ago.

It means that someone coming to the end of a mortgage they took out on a £150,000 house in 2005 will see their average repayments spike by £206 a month to £1,025.

It is estimated that around 1.4 million homeowners will see their fixed deals expire this year.

MoneyFacts' figures show that someone taking a typical five-year deal in 2003 on a £250,000 home loan will have to stump up almost £500 more when it comes to their new deal. Typical fixed rates are the highest since 2000, the Daily Telegraph reported.

The new research will come as bad news for first time buyers as well as existing homeowners. Not only are they facing greater servicing costs, but they are also now expected to put down a greater deposit to be approved for a mortgage.

Today's top stories at a glance