Almost a million householders are bracing for a recent financial squeeze, with month-to-month mortgage prices leaping by close to £100 as borrowing charges climb.
Those rolling off five-year fixed offers and locking in to new charges are paying an average of £94 more each month, according to figures from Connells Group.
The soar displays a sharp shift in mortgage pricing, with average charges on new five-year fixes at 4.72%, in contrast with just 2.5% on the offers many debtors secured in 2021 before rates of interest surged.
In complete, around 971,000 five-year fixed mortgages are due to expire this 12 months, according to the Financial Conduct Authority, while UK Finance estimates roughly 1.8 million fixed-rate offers will come to an finish.
The newest will increase come amid international financial turmoil linked to the battle involving Iran, which has unsettled markets and pushed lenders to reprice mortgages quickly.
Thousands of offers have been pulled or repriced since strikes were launched on February 28 amid fears over disruption to oil and gasoline provides through the Strait of Hormuz, fuelling inflation considerations.
Hopes of cheaper borrowing have also been dented. The Bank of England, which had cut its base charge six instances since August 2024, held charges at 3.75% on March 19 rather than urgent forward with another discount.
For many debtors, the shift has been abrupt. Those who secured new offers between late January and late February saw smaller will increase of between £22 and £66 a month on average, the Connells information reveals.
Mark Harris of SPF Private Clients informed the Times: “The past few weeks have been extremely difficult for those coming off fixed rates who may well have anticipated that they would be in a better position than they now find themselves.”
Even debtors on shorter fixes are feeling the pressure. Homeowners coming off two-year offers taken out in 2024 are now seeing only modest financial savings. Those securing a new deal since Sunday will save an average of £32 a month, with charges edging down only barely from 4.91% to 4.85%.
That is a far cry from expectations earlier this 12 months. Before the newest market upheaval, debtors refinancing two-year fixes were on monitor to cut funds by about £100 a month. Deals agreed in the remaining week of February, for instance, averaged 4.12% in contrast with 5.01% beforehand – delivering financial savings of £133 a month.
Karen Noye of Quilter said: “Mortgage rates have moved back in the wrong direction for those remortgaging, and the overriding emotion is now disappointment. Clients who fixed more recently, often at higher rates, had been pinning their hopes on a meaningful drop when they came to refinance.
“Instead, many are now coming to terms with the reality that the change in their monthly payments is minimal, or in some cases non-existent.”
Borrowers approaching the finish of a fixed deal can sometimes secure a new charge up to six months in advance, while retaining the option to change if higher presents emerge.
Experts also advise checking product switch offers from present lenders, which can offer aggressive charges without further affordability checks.
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