Fixed-rate mortgage ending soon? Here's what you need to know and what you can do

If you took out a mortgage between October 2020 and February 2023, it’s worth taking a moment to check when your fixed rate ends.

Around 350,000 households are on five-year fixed-rate mortgages from that period, and many will be coming to the end of those deals this winter.

If that’s you, now’s a good time to get prepared, as the mortgage market looks quite different to when you first signed up.

Why your mortgage payments could be going up

If you took out a mortgage five years ago, rates were low. In 2020, the average five-year fixed-rate mortgage was around 1.88%.

Today, that average has climbed to around 5%.

That difference can have a big impact on your monthly payments.

For example, if you’ve got a £200,000 mortgage, your payments could increase by around £333 a month, that’s nearly £4,000 more a year.

What’s causing mortgage rates to rise?

The main reason rates are higher now is because of the Bank of England’s base rate increases. These began in late 2021 to help control rising inflation, which was fuelled by the effects of the pandemic and global events like the war in Ukraine.

While the base rate has recently stabilised and market predictions are improving, mortgage rates are still well above the levels seen a few years ago.

Some lenders have even started to increase their rates again, including Nationwide and Halifax. While the changes are small (Nationwide raised its rates by 0.2% last week), they show that the market remains sensitive to economic conditions.

What you can do if your mortgage is ending soon

If your fixed deal is ending soon, there are steps you can take to stay in control, even if your payments are likely to rise.

Review your current mortgage deal

Start by checking:

• when your fixed rate ends
• what your current interest rate is
• what your new monthly payments might be on a higher rate

This gives you a clearer picture of what to expect and how much time you’ve got to act.

Speak to your lender

If you’re worried about affording higher payments, don’t wait until your deal ends. Your lender might be able to help by:

• extending your mortgage term to reduce monthly payments
• offering an interest-only option
• helping you switch to a more suitable deal

Lenders have a responsibility to support you and getting in touch early gives you more options.

See if you qualify for extra support

If your income is low or you’re claiming benefits, you might be eligible for the government’s support for mortgage interest (SMI) loan.

It’s paid as a loan, which you’ll need to repay with interest when you sell or transfer ownership of your home. You may be able to transfer the loan if you’re buying a new home.

You might also be able to get help with:

• energy bills
• council tax
• other cost-of-living support

Take control of your budget

When things are tight, a simple budget can make a big difference. Use our free budget planner to see where your money’s going and spot ways to save.