Borrowers nearing end of two-year mortgage deals could be in for rate shock

Home-owners who are approaching the end of a two-year mortgage deal could see their rate more than double if they do not hunt around for a new loan, analysis suggests.

In the coming months, borrowers who locked into record low rates two years ago could potentially see the cost of their mortgage repayments jump by thousands of pounds, said.

The average two-year fixed mortgage rate in May 2017 was 2.30%, according to its figures – and was on its way to falling to a record low of 2.20% in October that year.

When initial mortgage deals come to an end, borrowers often end up on their lender’s standard variable rate (SVR).

Moneyfacts said borrowers who opted for a two-year fixed deal two years ago could now see their interest rate more than double when moved on to the average SVR of 4.89%.

The average two-year fixed rate mortgage currently stands at 2.47%.

Moneyfacts predicts the motivation for borrowers to re-mortgage to a new rate rather than just sit on their lender’s SVR will strengthen in the coming months.

Darren Cook, a finance expert at, said: “Over the next six months, it is likely that many mortgage borrowers who secured a two-year mortgage deal two years ago may see their record-low interest rate expiring and will have no intention to revert to a rate that could see their interest rate double overnight.

“For instance, a borrower on a repayment mortgage of £250,000 who locked into the average two-year fixed rate of 2.20% in October 2017, if then transferred on to the predicted average lender’s SVR of 4.89% in October 2019 – assuming that the average SVR remains constant and no Bank of England base rate changes take place – will see their mortgage repayments increase by £4,336.20 per year.”

Mr Cook said that as more borrowers are motivated to re-mortgage, lenders may also improve their deals and marginally cut rates over the next few months to maintain a competitive edge.

He continued: “Indeed, the average two-year fixed-rate has already fallen this month, from 2.49% in March 2019 to 2.47% today.”

Mr Cook said it will be interesting to see if the average rate falls further still as providers target re-mortgage customers.