A leading financial analyst says some 1.5m homeowners will need to remortgage throughout 2024 – and it’s going to hurt for many of them.

The so-called Financial Resilience Barometer operated by business consultancy Hargreaves Lansdown measures financial resilience through five key metrics: Debt Control; Financial Protection for the individual and their family; Savings; Planning for Later Life; and Investment to make the most of their money.

The consultancy says of those 1.5m remortgaging households, some 18% who have had to remortgage onto a higher rate since the end of 2022 have ‘poor’ or ‘very poor’ financial resilience – compared to 12% of those who have yet to refinance. And households that have remortgaged have just £315 left at the end of the month – £95 less than those who are yet to remortgage. 

Sarah Coles, head of personal finance at the consultancy, says: “Most are moving from deals costing them less than 3%, to rates which were just shy of 6% throughout most of June and July (average rates on two-year fixed rate mortgages according to Moneyfacts). As a result, over the next 12 months, they’re likely to be carrying far less affordable debts.

“Those who have already remortgaged have seen a major blow to their resilience, with an average of just £315 left at the end of the month – compared to £401 overall, and £410 among mortgage holders who haven’t yet had to remortgage. It means almost one in five of them are facing tricky financial times – scoring ‘poor’ or ‘very poor’ for overall resilience.”

But she says things are actually looking marginally brighter for remortgagers in the coming months. 

“Those on fixed deals have been shielded from the worst of things so far. Since the start of the decade, they’ve seen the largest increases in their resilience scores, because so far they’ve benefited from wage rises, and have not yet paid the price of higher monthly mortgage payments.

“Those who have yet to remortgage are also likely to be on slightly higher rates than those who have done so since 2022 – and they’re remortgaging onto rates that are down from the peak. Those who remortgage in the next six months or so are likely to be moving from a rate of 2% to 2.5% to one that’s currently closing in on 5%. 

“It means the jump in rates is going to be painful, but they don’t have quite the same gap to clear as those who came before them – who faced a rise from less than 2% to more than 6.5% in some instances.

“It’s also worth highlighting that those who own with a mortgage tend to be in a reasonably strong position overall. Around three quarters have enough emergency savings (73%) and more than half (57%) have enough money left at the end of the month to be resilient. It puts them in a better position to withstand the blow.”