Sarah Coles, head of personal finance at AJ Bell, said: “The good news is that a typical household remortgaging from two-year fix will only see their monthly costs rise £45 a month.
“This is relatively small potatoes for homeowners who had to shoulder average hikes of £120 between 2022 and 2024 when their fixed rate mortgages expired. However, this is only part of the picture.
“Many of them were expecting rates to fall before the war in Iran started, so they may have planned ahead on the assumption they would pay less rather than more in the latest round of remortgaging. It means they may need to go back to their budgets.
“Meanwhile, those with bigger mortgages will face larger hikes, while those for whom their mortgage makes up a significant proportion of their spending will feel the rise more keenly.
“Finally, there are those who will be hit much harder, because they locked in a deal before runaway inflation led to eye-watering rate hikes.
“There are almost three quarters of a million households paying less than three per cent on their fix who will have to remortgage by the end of this year, and their repayments will jump by £170 a month.
“They have benefited enormously from having fixed the rate at the right time, but it means they’ll face all the pain of rate rises in one fell swoop.
“If you have a remortgage looming, it’s worth securing a rate as soon as possible – you can usually agree a deal between four and six months before the remortgage is due.
“Then, closer to the time, you can shop around again. If rates have fallen in the interim you can cancel the deal you’ve locked in and go elsewhere. If they have risen, you’ll have secured a bargain.
“It involves some extra legwork, but given how uncertain the environment is, it’s a welcome opportunity to hedge your bets.”
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