Analysts warn that if oil and gas prices stay high amid the Middle East conflict, broader UK living costs could rise, limiting the scope for further Bank of England rate cuts.
Charlie Evans, at Compare the Market, said: “The very recent rise in mortgage rates, driven in part by global events of recent weeks, could hit the nearly one million households coming off ultra-low five-year fixed deals this year.
“In 2021 alone, 971,105 five-year fixed rate regulated mortgages were taken out. Many of these would have likely been attached to sub-2% rates available at the time. As these expire in 2026, these borrowers are potentially facing a stark refinancing shock.
“Based on January rate data, households with five-year fixes up for renewal were already on track to see average annual repayments rise by more than £2,000, while those reverting to a standard variable rate faced potential increases of more than £5,600 a year. With rates climbing further, these jumps could become even more severe.”
