More than 900,000 households to benefit from fall in fixed rate mortgages

New research by Compare the Market has found that 937,433 homeowners who took out mortgages in 2023 could benefit from a decline in monthly payments as they come off two-year fixed rate deals that had an average interest rate of 5.06%, according to their analysis based on a Freedom of Information request to the Financial Conduct Authority and data from the Bank of England.

Homeowners coming off the two-year fixed-rate deals could find that mortgage rates have fallen since 2023. Bank of England figures show the average two-year fixed rate is 4.6% and the average five-year fixed rate is 4.33%. These rates could fall further if the Bank of England decides to cut the base rate this week.

These homeowners may be able to save by shopping around for a new mortgage deal, rather than opting for their lender’s SVR when their initial mortgage term comes to an end. Based on a 30-year term and an average mortgage debt of £178,523, homeowners who move onto a new fixed-rate deal could see their annual payments decline by £597 on a new two-year fix, or £940 on a new five-year fix. However, if these homeowners fall onto their lender’s standard variable rate (SVR) their annual payments could increase by £2,861.

Guy Anker, Mortgage Expert at Compare the Market, said “If the Bank of England cuts interest rates it will be good news for households on a variable rate mortgage or whose deal is ending soon, potentially lowering their biggest monthly expense.

“Our research shows average mortgage rates are lower than they were in 2023, so anyone coming off a two-year fixed-rate deal may find their monthly payment could fall if they shop around for a new deal. If your mortgage deal is set to end this year, it’s wise to consider your options now as you can sometimes lock into a new deal up to six months before it is due to start. While there will be exceptions, it is often cheaper to get a new deal than move onto your lender’s standard variable rate (which most fixes and tracers revert to).”

Average Mortgage Repayments

	2023 Two Year Fixed Rate	2025 Standard Variable Rate	2025 Two Year Fixed Rate	2025 Five Year Fixed Rate
Average interest rate	5.06%	7.13%	4.60%	4.33%
Monthly repayments	£965	£1,203	£915	£887
Annual repayments	£11,579	£14,440	£10,982	£10,639