With 1.4 million fixed-term mortgages set to expire in 2023, we take a look at what this means for borrowers.
For 1.4 million home owners whose fixed-term mortgage is due to expire in 2023, their mortgage payments are likely to rise substantially.
The Office for National Statistics (ONS) says that 57% of the UK’s fixed rate mortgages were fixed at rates below 2%. Those that expire in 2024 will generally be 2-year deals from 2022 and five-year deals from 2019, when rates were on the whole higher than 2%.
The ONS further notes that a peak of fixed rate deals ending is expected between April and June 2023. The 1.4 million borrowers looking for new deals or facing standard variable mortgage rates will see substantial increases in their monthly outgoings following successive Bank of England base rate rises.
Mortgage rates
The report notes that the interest rate on outstanding fixed rate mortgages was 2.08% in November 2022. The current average variable-rate interest is 4.41%, while the average interest on new fixed-rate mortgages is around 6%.
An increase from 2% to 6% on a 25-year capital and repayment mortgage of £100,000 would mean a rise in monthly payments from £424 to £644.
Mortgage interest rates in 2023
The Office for Budgetary Responsibility provides analysis of public finances and anticipates that the Bank of England base rate will increase to 4.8% in the second half of 2023, before falling to 4.5% in 2024, still substantially higher than existing rates on fixed rate mortgages.
Financial information platform Moneyfacts says that the average interest on a two-year fixed rate mortgage is now 5.79%. For a five-year deal it is 5.63%.
For those who do not remortgage to find a new fixed rate deal, average standard variable rates are 6.64%.
Remortgaging
In the current market, borrowers need to move fast when they find the right deal, as lenders are often withdrawing deals after only 15 days on average, substantially less time than in January 2022, when deals were available for an average of 28 days.
If you are considering remortgaging, you will need a solicitor to represent both you and the lender. You are advised to find someone to act for you promptly so that you can take quick action once you make a mortgage application.
Contact us
If you would like to speak to one of our expert property lawyers, ring us on 0333 3055 189 or email us at info@lpropertylawyers.co.uk
