There’s a potential ‘remortgage nightmare’ awaiting more than three million people, according to Hargreaves Lansdown.

The investment platform said that two in five people with a mortgage haven’t yet experienced a hike in their monthly repayments since interest rates started rising, because they are still within a fixed rate deal period.

But when that comes to an end, they are likely to face stark payment shock.

Sarah Coles, head of personal finance at Hargreaves Lansdown, explained: “There’s a remortgage nightmare lying in wait for more than three million people. They’ve been shielded from the horror of rate hikes so far by a fixed mortgage, and when their deal runs out, they face the full force of the rises in one single hit.

“Anyone whose deal comes to an end in the coming year is set to see their monthly payments increase by an average of £192, but almost two thirds of people said this would cause them financial problems.”

Higher rates

Those who have remortgaged since rates started rising have already been hit with higher rates, added Hargreaves Lansdown.

One in five say their monthly payments have already risen more than £200 in the past 18 months, while 16% of people admit they are already struggling with their mortgage payments – rising to 21% of those aged 55 and over.

Almost half of those with a mortgage (48%) say they’d struggle if their monthly repayments rose as little as £150.

Coles continued: “The ONS calculated that 1.3 million fixed deals would come to an end in 2023, most of which were under 2%. At the moment, the average two-year fixed mortgage costs around 5.5%. If rates don’t fall back before they have to remortgage, it could spell catastrophe for hundreds of thousands of people.”

She added that, depending on when your fixed rate deal is up, there is the hope that rates will fall back, ‘sparing you the worst of the pain’.