New data reveals that 1,095,905 households who secured two-year fixed-rate mortgages in 2024 are approaching the end of their mortgage terms this year. These homeowners, who initially agreed to an average interest rate of 4.81%, could face substantial increases in their monthly payments if they do not actively switch to a new deal.
According to figures obtained by Compare the Market from the Financial Conduct Authority, those who allow their mortgages to revert to their lender’s standard variable rate (SVR) after the fixed period ends may see their monthly payments surge from £1,149 to £1,432. This equates to an additional £283 each month, or over £3,000 more annually, which could place considerable financial strain on many families.
Laura Pomfret, personal finance expert at Compare the Market, emphasises the importance of proactively managing mortgage renewals. She states, “An extra £283 a month on your mortgage is a significant amount of money for most households. That’s more than £3,000 over the course of a year, so simply rolling onto a higher rate without considering your options could have a real impact on your budget.”
READ MORE: Warning Issued Over Fake BBC TV Licensing ‘Renewal’ Emails Circulating
Pomfret advises homeowners to closely monitor their mortgage arrangements, noting, “A mortgage is likely to be the biggest outgoing in any household, so it’s worth paying attention to and looking for great savings for your budget.” She recommends understanding potential new repayment amounts ahead of time to plan accordingly and make informed decisions about budgeting.
She further stresses the benefits of shopping around early: “It also makes sense to shop around well in advance of any fixed deal ending as these things can take time and you could lock in a good rate. Give yourself plenty of time before your deal ends to understand your options, work out what you can comfortably afford, and seek guidance if you need it.”
Pomfret adds that borrowers should look at all costs associated with potential new deals, including monthly payments, product fees, and other charges, to ensure the deal fits within their financial circumstances.
Echoing this advice, Sajni Shah, money expert at Compare the Market, notes, “More than one million homeowners are coming to the end of two-year fixed rates this year, and many could face a significant increase in their monthly repayments if they simply roll onto their lender’s standard variable rate.”
She offers reassurance to those nearing renewal, stating, “The good news is that if you’re a homeowner coming up for renewal, you don’t have to accept your lender’s default rate. Taking the time to explore your options before your current deal ends could help you secure a more competitive mortgage and avoid paying more.”
Shah encourages homeowners to compare deals across lenders, saying, “Shopping around to compare mortgages from different lenders is one of the simplest ways to see what’s available and find a deal suited to your individual circumstances. Even if you ultimately decide to stay with your existing lender, comparing first could give you greater confidence that you’re getting the right mortgage for you.”