There are some 600,000 fixed deals due to end in the second half of 2022 and approximately 1.8m due to expire next year, according to data from UK Finance.
Most of these borrowers will be facing a considerable jump in costs.
The average two-year fix in September 2021 was 2.38 per cent but has now nearly doubled to 4.24 per cent, according to Moneyfacts.co.uk.
Over the same time period, the typical five-year fix has gone from a rate of 2.63 per cent to 4.3 per cent.
These changes add hundreds of pounds to monthly repayments for borrowers.
Act quickly or lose out
Rhys Schofield, managing director at Peak Money, said the current upheaval makes it really important for brokers to clearly explain the current market to clients or it could lead to a drop-off in customers.
In many cases, he said they are showing clients sourcing systems to underline where rates are now sitting.
Schofield said he it’s also imperative for customers to understand that they don’t have time to think over an offer for a week, if they want to secure a rate, they need to act quickly.
He pointed out that clients who have the capacity to overpay their existing fix, will acclimatise to higher rates and will have lower repayments when they do come to take out a new deal.
Oil on troubled waters
There is understandably a lot of worry among homeowners, but brokers have the power to act as a calming influence for borrowers and provide solutions.
Dominik Lipnicki, director at Your Mortgage Decisions, said: “First and foremost, our advisors are on hand to talk through the various options with our clients.
“While many watching the news or reading the papers are understandably anxious, it is important to remember that we have access to more than 100 lenders and it is only a minority of these that have pulled their products. It is imperative that clients consider the bigger picture and not just the immediate monthly cost.”
Jamie Lennox, director at Dimora Mortgages agreed that educating clients and managing expectations is the best approach right now.
He added: “Mortgage [plans] don’t have a one-size fits all solution and consumers should be seeking expert advice to manage through these challenging times and to put a plan in place accordingly.”
Help in advance
Emma Jones, managing director at When The Bank Says No, said her firm is contacting clients who are in the last 12 months of a deal to offer reviews to help them avoid falling on to higher variable rates.
She said: “We feel this is giving them more time to plan and prepare rather than them being too late and sitting on a SVR rate which could be crippling.”
However, brokers also have a responsibility to act as a reality check for borrowers — rates are rising and many will need to find new ways to adapt to higher costs.
Jones added: “Honesty is the best policy and we cannot ‘sugar coat’ the reality of it being expensive for homeowners right now.”
