UK Mortgage Hikes: £300-a-Month Shock for Thousands of Households

Tens of thousands of households who signed five-year mortgage deals in late 2021 are facing significant bill hikes as the 'ultra low mortgage era' comes to an end. The Bank of England began increasing interest rates from their record low of 0.1 per cent in December 2021, and mortgage deals have followed this trend.

Average five-year rates got to as low as 2.55 per cent in October 2021 before rising to over 6 per cent a year later. Since then, the cheapest available rates have never fallen below around 3.5 per cent, and average rates have never dropped below 4.5 per cent.

Those who took on five-year fixes will now face bill rises of £300 a month when they come to renew. Experts say that borrowers who fixed for five years in late 2021 were still able to secure rates in the low twos, and the jump in monthly repayments may be substantial for some households.

Mortgage experts warn that rates are unlikely to head back to anywhere near where they were prior to 2021. Borrowers who come off a cheap deal later this year can usually lock in a new rate now, but those outside of the four to six-month window should review their mortgage balance and prepare for the increase.