If you’re due to remortgage soon, you might understandably be concerned about whether you’re going to face much higher mortgage bills when you move on to a new deal.

Compared to the record-low rates on offer a couple of years ago, borrowing remains comparatively expensive – but the market is much calmer after the periods of volatility seen in the past couple of years.

One helping factor is that interest rates seem to have finally peaked, as the Bank of England chose to hold the Bank Rate at 5.25pc again following its most recent Monetary Policy Committee meeting, where it’s been since August. It will be held until at least May 9, when the next rates decision will be announced.

However, given Britain was found to be in a technical recession at the end of last year – which experts predict may already have ended – it was thought that the Bank Rate may take longer to fall than previously expected. As a result, some lenders have been increasing the rates offered on their mortgage deals – but usually only by small amounts. 

The average two-year fixed-rate mortgage is currently 5.81pc, while five year deals are averaging at 5.39pc, according to data analyst Moneyfacts.

The likelihood of future Bank Rate falls hinges on wage growth and the consumer prices index (CPI) measure of inflation. CPI measured 3.2pc in March, down from 3.4pc in February – with expert predicting it could reach its target 2pc by April. However, it may not be enough to convince the Bank of England’s Monetary Policy Committee to reduce the Bank Rate – it’s next decision will be announced tomorrow.

The Bank of England had increased the Bank Rate multiple times since December 2021 in a bid to bring inflation back down to its target 2pc. It’s stuck at 5.25pc since August 2023.

Use our calculator to work out how recent shocks to the mortgage market might impact your monthly payments. 

First-time buyer

A first-time buyer bought their home with a 10pc deposit and 2.1pc mortgage two-year rate in 2022. Their outstanding mortgage is £250,000.

The new current average two-year fixed mortgage rate of 5.81pc would see their monthly payments increase by £510, hitting £1,582 in total payments a month.

Even if they earnt £45,000 – a high salary compared to the national average – it would see more than half of their take home pay go to mortgage payments, compared with just over a third before the renewal. 

Mid-way through

Someone is renewing a mortgage on their semi-detached home which they bought a decade ago. They have 15 years left on their mortgage with £100,000 left to pay off. 

Their current rate, 1.59pc, is ending; using the current average, they would see their monthly payments jump from £625 on their current rate to £834.

Nearing the end

This person bought their detached home over two decades ago and has just two years left on their mortgage, with £7,000 left to pay.

They’ve been on a 1.59pc mortgage rate for the past two years, paying £297 a month.

Because they bought their house when prices were cheap and their remaining mortgage is low, their payments will hardly be affected by the increase, going from £297 to £310 a month if they remortgage at the current market average.

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