If you’re worried that your fixed deal is up this year, you’re not alone. 57% of people who need to remortgage in 2023 are coming off two-year deals fixed at 2% rates.

If your fixed-rate mortgage deal is due to expire this year, you’re not alone. More than 1.4 million homeowners are in exactly the same boat.

And more than half of that 1.4 million, around 57%, are coming off two-year deals that were fixed at 2% rates, according to the Office for National Statistics.

The report said that with the average cost of new two-year fixed rate deals standing at around 6%, someone with a £100,000 mortgage would face a £220 increase in monthly repayments.

Someone with a £300,000 loan would face a £661-a-month jump.

A total of 353,000 fixed rate mortgages are due to expire in the first three months of the year, followed by a further 371,000 in the three months to the end of June, with the rest coming up for renewal during the second half of the year.

An estimated 86% of homeowners with outstanding mortgages are on fixed rate deals, under which the interest rate charged stays the same for the length of the product term, usually two or five years.

The figure is up from just 51% in 2016.

What will happen to interest rates in 2023?

The official cost of borrowing is known as the Bank of England Bank Rate.

The Office for Budgetary Responsibility, which provides independent analysis on the UK’s public finances, has forecast that the Bank Rate will increase to 4.8% in the second half of 2023, before falling to 4.5% in 2024.

But this is just an estimate, and a number of factors, including the uncertain economic outlook, war in Ukraine and high inflation, make it more difficult to predict the future path of interest rates than usual.

What’s happening in the mortgage market right now?

The good news is that despite the fact the Bank Rate increased in the final part of last year, the cost of fixed rate mortgages has actually fallen for the past two months.

This is because the cost at which lenders borrow money for the deals shot up in the wake of the mini-Budget.

It has since come back down after new Chancellor Jeremy Hunt reversed many of his predecessor’s announcements.

The average interest rate charged on a two-year fixed rate mortgage is now 5.79%, according to financial information group Moneyfacts.

For a five-year deal, it is 5.63%.

If you’re borrowing just 60% of your home’s value, typical rates fall to 5.39% for a two-year fix and 5.33% for a five-year fix.

And some sub-5% deals are now becoming available.

By contrast, the average cost of a standard variable rate mortgage – the rate borrowers are automatically put on when their current deal ends if they do not remortgage – is 6.64%.

Those looking to remortgage will need to move fast, with the average deal available for just 15 days before lenders pull it, down from 28 days in January 2022.

Renters also face higher housing costs

The ONS study found that homeowners are not the only ones facing increased costs, with those renting in the private sector seeing the fastest growth in rents since records began in 2016.

One in four renters said their rent had gone up in the past six months, with rents rising by an average of 4% in the past year.

Rent accounts for an average of 24% of renters’ weekly expenditure, compared with just 16% for those who have a mortgage.

Key takeaways

  • More than 1.4 million fixed rate mortgages are due to expire this year
  • Around 57% of people who need to renew their mortgage in 2023 are coming off two-year deals fixed at 2% rates
  • But mortgage rates have fallen for the last 2 months and sub 5% fixed-rate deals are now available