More than 350,000 households who locked in low-interest five-year fixed-rate mortgages between October 2020 and February 2023 are expected to see their costs jump this winter as their deals expire, according to analysis by bill management app Nous.
Nous found that almost half of mortgages taken out during that period were five-year fixed-rate deals, with an average rate of 1.88%. Those consumers avoided rolling off loans when mortgage rates peaked two years ago, but now face a payment shock as they shop for new deals at current rates of around 5%.
For a typical £200,000 mortgage, monthly payments could rise by £333 to £1,169, an increase of £3,996 a year. On a £500,000 loan, the extra cost would be £833 a month. Greg Marsh, chief executive of Nous, said: 'Hundreds of thousands of homeowners are in for an unpleasant shock this winter. The era of ultra-cheap mortgages is over.'
The increases come as other household bills rise, including water, council tax, and energy prices set to go up in October. Major lenders such as Nationwide, Halifax, and HSBC have recently increased rates on some deals, typically by small amounts but adding to borrower costs.
Hina Bhudia, a partner at mortgage broker Knight Frank Finance, noted that since the Bank of England cut the base rate to 4% in August, further cuts look less certain, with the next reduction not expected until spring 2025. She said: 'That's feeding through into mortgage pricing... these changes may only be a few tenths of a percentage point at a time, but they still translate into noticeably higher monthly payments.'
