Over a million people are being hit by the standard variable rate (SVR) and variable rate mortgage rise this month.
Which? estimates consumers will face an additional £300 million in mortgage repayments over the next year.
New research from Which? reveals 70 per cent of mortgage-holders are concerned about an increase in interest rates. 14 per cent say they are already struggling with repayments. The greatest impact of these latest rises will be felt by ‘mortgage prisoners’ who are unable to move to another provider.
Three quarters of mortgage-holders have said they would be affected if their repayments increased by £50 a month, with 41 per cent saying they would need to cut back on regular spending, 20 per cent would need to reducing savings and 11 per cent would not have enough for essentials.
An increase of £100 a month would see 20 per cent of mortgage-holders not having enough for daily essentials like food and 11 per cent being unable to pay their mortgage. Consumers also highlighted the emotional impact of increases in mortgage repayments, describing them as “devastating” and “a disaster”.
Which? chief executive, Peter Vicary-Smith said: “Our advice to anyone struggling with their mortgage repayments is speak to your lender straight away. It is encouraging that a third of people we spoke to had approached their lender but worryingly in one in five cases, they said their lenders offered no help at all. This is just not good enough and we want to see banks do more to help their customers who are struggling.
“These SVR rises are the consequence of the lack of competition in the market and the failure of the Government to take action to promote competition. This is why the new financial regulator, the FCA, needs to be a watchdog not a lapdog. It must stand up for consumers and stand up to the banks.”
Which? wants lenders and the Financial Services Authority to do more to protect consumers against unjustified interest rate rises and ensure that consumers are offered the ability to fix their payments at a reasonable level. Lenders must not be allowed to take advantage of borrowers who are unable to move lender.
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