UK Finance analysis suggests that homeowners coming off fixed-rate mortgages this year and shifting to a new deal can typically expect to see their disposable incomes shrink by seven per cent. The trade association said some 1.3 million customers are set to reach the end of their fixed-rate deals this year and, unless they remortgage, they will move on to their lender's standard variable rate (SVR).
The expected decrease in the amount of income that households will have left over to spend and save at their discretion is due to a combination of rising mortgage interest rates and the surging cost of living. UK Finance said it is expecting some upwards pressure on mortgage arrears as outgoing costs increase, particularly among households on lower incomes.
A ‘trends in the economy and lending’ analysis paper published by UK Finance said: "On average, we estimate the combined impact of cost-of-living and re-mortgage onto a new deal would result in around a 7% decrease in their free disposable income."
