As many as 35,000 borrowers with the nationalised bank Northern Rock will have to find hundreds of pounds extra each month to meet their mortgage repayments, or face repossession.
The situation has arisen because Northern Rock's two-year fixed-rate mortgage deals – sold at the height of the housing-market boom in 2006 – are coming to an end. Overnight, from 1 November, hard-pressed borrowers will be thrust on to the Rock's standard variable rate, which stands at well above the industry average at a whopping 7.34%. Borrowers who are signed up to the two-year fix could be paying as little as 3.99%.
As a result, according to Moneyfacts.co.uk, the financial information service, a borrower with a £200,000 home loan will see monthly repayments shoot up from £1,055 to £1,430, an increase of £375. Over the course of a year this equates to a staggering £4,500 rise in mortgage repayments. Other borrowers, who have a fix at a higher interest rate, will be slightly less affected but nearly all can expect the amount they repay to rise by more than £100 a month.
Independent on Sunday