Martin Lewis has warned millions of homeowners that a “mortgage ticking time bomb” has exploded with “millions facing huge bill-shock as their fixes end.”
Around 2.4 million fixed-rate mortgages are due to end between now and the end of 2024, according to figures from UK Finance.
Many of these homeowners could be in for a bill shock when they come to remortgage, having been used to paying significantly lower rates.
According to the Resolution Foundation think-tank, annual mortgage repayments are set to rise by £2,900 for the average household remortgaging next year.
The Bank of England is expected to raise the base rate further on Thursday as it grapples with stubbornly high inflation. If this happens, it would immediately push up costs further for some borrowers on variable rate mortgages.
The Money Saving Expert attended a mortgage summit with the Chancellor in December to try and put plans in place to combat the issue.
Taking to Twitter as the average fixed two-year rate on offer topped 6% for the first time this year, Martin described the summit as a “missed opportunity talking shop”.
Martin said: “The summit in December was attended by the Chancellor, FCA chair, the bosses of UK's biggest banks and me (I'd asked for consumer charities & mortgage experts to attend too but that wasn't agreed - tho my team and I worked hard talking to charities and mortgage brokers before to collate ideas).
“My reason for suggesting the Chancellor took action was simple. We needed to prepare in case it rates rocketed - waiting for it to happen would be too late. Yet now, the time bomb has exploded, and we're scrambling about what to do.”
He continued: “One of the big concerns I raised was that banks were increasing their margins - basically the gap between what lenders are charged and savers paid.
“That should (and still should) be tightened and political pressure needs applying to ensure either better mortgages or better savings or best, both.
They can't say they weren't warned!
— Martin Lewis (@MartinSLewis) June 19, 2023
Last Autumn, I raised an alarm about a coming potential mortgage ticking time bomb with millions facing huge bill-shock as their fixes end.
So much so the Chancellor called a mortgage summit; sadly it was just a missed opportunity talking…
“Other practical suggestions were not about radical change, but easy to agree forbearance and help measures to get people over the hump while they readjusted their finances.
“A range of methods such as payment holidays, payment reductions, lengthening the mortgage term were discussed, plus proactive communication with borrowers who look like they may be struggling and independent solid guidance about what people's options were if they were struggling.
“There were lots of nods from the bankers and many 'we do that alreadies', and indeed some extra customer communications did come out on the back.
“Yet real changes met push back - sometimes the banks both from banks and the FCA.”
He added: “None of the suggestions have seen any real fruition. The attention faded, especially when rates didn't rise as sharply as first expected.
“Though we are now in exactly the situation that the whole meeting was meant to prepare for.”
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