Millions face £250 increase to mortgage payments in 2023 – next steps

Martin Lewis warns of a 'horrendous shock' for mortgage holders

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Following the Bank of England’s decision to raise the base rate to 3.5 percent, mortgage rates will continue to rise with further hikes expected in the future. Research suggests that the average mortgage repayment rise will be around £250 per month for those with deals expiring next year.

The amount that someone’s mortgage repayments will rise by will be dependent on the size of the actual mortgage they have.

People with a fixed-rate home loan due to expire at the end of 2023 are facing an increase in their average monthly repayments of around £250, according to Bestinvest, because they will have to refinance onto a higher rate.

This could mean that costs surge by £3,000 a year for many households who are already seeing their finances stretched by increased living costs. spoke exclusively with Tim Leonard, personal finance expert at NerdWallet, about the potential impact this could have on homeowners.

He said: “The recent upheaval in the mortgage market will affect many existing borrowers, as well as first-time buyers, but those whose deals are due to come to an end will be paying a close eye on rising interest rates and higher mortgage repayments when negotiating their next deal.

“It remains to be seen if interest rates will come down sharply anytime soon, but some lenders have slightly lowered their rates recently. 

“If a fixed rate mortgage is coming to an end, the choice is usually between moving to the lender’s standard variable rate or remortgaging.

“Choosing a standard variable rate could be the simple option, but it may not necessarily be the best one.”

Standard variable rates are set at the discretion of the lender and tend to be higher than other mortgage rates. 

He explained a way to potentially lock in a better deal is by remortgaging, but borrowers should be aware that they’ll probably be looking at higher rates than they’d been paying before.

Many mortgage offers will last for up to six months, so once a rate is locked in, borrowers will have the chance to assess the market and see whether a better value deal comes along before committing.

Mr Leonard continued: “With interest rates generally not as favourable as they were a year ago, borrowers should shop around to find the best mortgage deal for them. 

“Independent financial advisors and comparison sites are good sources to learn more about a wide range of mortgage products.”

The Bank of England raised interest rates on December 15 from three percent to 3.5 percent – it puts the Bank rate at its highest level since 2008.

The estimated two million homeowners on variable rate deals, such as base rate trackers, will see an almost immediate rise in their monthly repayments following the latest Bank rate rise.

As an example, a tracker rate rising from four percent to 4.50 percent costs around an extra £50 a month on a £200,000 loan.

Those on fixed-rate deals, where the interest rate is locked in for, say, two or five years, won’t see any difference in their monthly payments. 

But when their deal comes to an end, they may find they have to pay a higher rate for their next mortgage because of recent increases in the main Bank rate.

According to, online mortgage broker, the average cost of two, three and five-year fixed rate deals across all deposit levels last week was 5.33 percent, 5.04 percent and 4.87 percent respectively. This compares to highs of more than 6.50 percent in October.

People could work out the monthly cost of a mortgage against various interest rates with a mortgage calculator.

Mr Leonard stressed Britons always be sure their advice source is authorised and regulated by the Financial Conduct Authority.

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