Homeowners with fixed-rate mortgages face big increases in their monthly payments when they remortgage, as average rates on two- and five-year agreements now exceed 4 percent.
The average two-year fixed rate is now 4.24 percent, the highest since January 2013.
It means those currently looking to remortgage at the end of a two-year agreement, which they locked in in September 2020 when rates sat at around 2.24 percent, can expect to see their monthly payments increase by more than £200.
Rate hikes: The Bank of England base rate has risen since December 2021, raising the cost of money for borrowers
This is based on a property worth £286,000, the current UK average.
Those with five-year fixed rates that are coming to an end now face paying an average rate of 4.33 percent, the highest since November 2012.
Borrowers who set their mortgage rate five years ago at around 2.77 percent would see their monthly payments increase by £180 for a property of the same value, according to figures from Hub Financial Services.
Typical rates have risen for 11 straight months, according to MoneyFacts analysts, and the number of mortgage products on the market has also declined.
Homeowners who transition to standard variable rate mortgages at the end of a fixed term will see their payments increase even more dramatically.
The typical SVR is now 5.40%, up from 4.44% in September 2020.
According to Moneyfacts, a borrower with a 25-year £200,000 mortgage coming out of a typical two-year fix at the typical SVR could see their payments increase by £344.
SVR borrowers are also not protected from further interest rate hikes.
>> Browse the latest rates using This is Money and the L&C Mortgage Finder
The Bank of England has been steadily raising its base rate since December 2021, when it stood at 0.1 percent.
It currently stands at 1.75 percent, with another rise to 2.25 percent expected when the Monetary Policy Committee meets next week.
MoneyFacts analysis shows rapidly rising fixed-rate mortgage rates that are expected to rise further before the end of the year.
Graham Cox, director of SelfEmployedMortgageHub.com, said: ‘Ultra-low rates over the last decade have led people to borrow up to the limit, assuming rates would stay low.
That is no longer the case. Unfortunately, we could see a lot of forced sales over the next year or two, which would drive down property prices.”
And while mortgage rates have increased, the choice of products for borrowers has diminished. The number of products available to homeowners plummeted by 517 over the past month to leave just 3,890 on sale for September, the lowest number in more than a year.
This is 1,425 less than what was available in early December 2021 (5,315) before the first of the recent base rate increases. The number of products offered fell across all loan-to-value levels, the first time this has happened since April 2020.
Eleanor Williams, finance expert at Moneyfacts, said: “The average product life increased to 28 days in September, from a record low of 17 days last month, but instead indicates a more stable mortgage market, when Considered in conjunction with the significant number of product recalls, it may be a sign that lenders are adjusting and condensing their ranges and refocusing their product offerings.
“It is unlikely to come as a surprise that average rates have continued to rise, with overall average two-year and five-year fixed rates rising for the 11th straight month.
‘As expected, the two-year average follow-up rate also increased, changing in line with recent base rate increases. At 3.33%, this is 1.75% higher than the average equivalent rate in December 2021.
While this is lower than the current average two- or five-year fixed rates, it is important that those tempted by one of these products, especially if that preference is based on the lower introductory rate, speak with a qualified advisor. to consider the implications. .
“With the possibility of another base rate increase this month, and the possibility of two additional increases before the end of the year, it’s vital to ensure your mortgage remains affordable if rates continue to rise.”
The best mortgage rates and how to find them
Mortgage rates have risen substantially as the Bank of England base rate has risen rapidly.
If you’re thinking about buying your first home, moving or remortgaging, or are a buy-to-let landlord, it’s important to get good, independent mortgage advice from a broker who can help you find the best deal.
To help our readers find the best mortgage, This is Money has partnered with independent broker L&C.
Our L&C-powered mortgage calculator can allow you to filter offers to see which ones best match your home value and deposit level.
You can also compare different fixed-rate mortgage durations, from two-year arrangements to five-year arrangements to ten-year arrangements, with monthly and total costs displayed.
Use the tool at the link below to compare the best deals, taking both fees and rates into account. You can also start an online application on your own time and save it as you go.
> Compare the best mortgage deals available now
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