When applying for a mortgage or homeowner loan, it seems that the majority of people, whether they are being advised by a professional mortgage broker or not, tend to opt for a fixed rate loan to repay their debt.

In fact, out of all the homeowner loans being paid in the UK at the present time, half of these are on a fixed rate deal and for the age range below 35 years old, this figure rises to 67 per cent.

The logic behind this philosophy is quite simple, take out a cheap loan for a short period with the security of knowing that your repayments will not increase during that time and then simply remortgage to another cheap deal, once the initial period has expired.

But since the credit crunch, the outlook has changed for many individuals on a fixed rate loan, as banks and building societies have withdrawn many of their loan deals and those which remain are now considerably more expensive than the rates from two years ago.

Currently there are approximately 1.2 million homeowners in the UK whose fixed rate deal will be finishing in the next six months and with many of these people not optimistic about finding a comparable deal for themselves, they face the prospect of their homeowner loan reverting to the lender’s standard variable rate, which will be unaffordable for many who are already finding their finances stretched.

Even if they manage to remortgage their home, most will still face a large increase in their payments. Currently the average interest rate being charged on a two year fixed rate mortgage loan is 5.5 per cent. The cheapest rate available on the market at the present time is 6.15 per cent. The research, which has been carried out by Impartial.co.uk, claims that in total, homeowners will see an increase in their mortgage repayments of around £522 million over the next six months.

A spokesman for the company said “Confidence is low in the mortgage market. With so many of the best deals gone since the start of the credit crunch a year ago, those that need to remortgage are worried about the prospect.”