Over 1.4 million households facing mortgage repayment hike this year
More than 1.4 million households in the UK face the prospect of interest rate rises when they renew their fixed-rate mortgages in 2023.
Figures from the Office for National Statistics show that most fixed-rate mortgages in the UK (57%) coming up for renewal in 2023 were fixed at interest rates below 2%.
Those deals due to mature through 2024 will be from two-year fixed rate deals made in 2022 and five-year fixed rate deals made in 2019 when mortgage rates were generally higher than 2%.
In the first quarter of this year (Jan to Mar 2023), 353,000 fixed-rate mortgages will have to be renewed. Based on Bank of England (BoE) transactions data, the Office for National Statistics predicts that the number of fixed-rate mortgage deals coming to an end in 2023 will peak in Quarter 2 (Apr to June) 2023 at 371,000.
BoE data also shows that most mortgages are agreed at a fixed interest rate, where the interest rates stay the same for the duration of the mortgage deal, with 86% of outstanding UK mortgages being repaid at fixed interest rates in Quarter 3 (July to Sept) 2022. This is up from 51% in Quarter 1 (Jan to Mar) 2016.
Aaron Strutt, product director at Trinity Finacial, says: "While most borrowers will want to stick with their bank or building society and swap to a new deal, others will have to shop around.
"This is because they want to borrow more or take a product without early repayment charges. Remaining with your existing lender might be the easiest option in many cases, but it is not always the best or even a viable option for many people."
Most borrowers have been protected from the recent rate hikes
While interest rates have been increasing since the start of 2022, most fixed-rate borrowers have been insulated from those increases, as most were fixed at interest rates below 2% and are still within their fixed-rate period.
Those on a variable rate mortgage, where the interest rate varies over the repayment term, will have already seen higher interest rates due to market conditions, including rises in the BoE base rate.
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