According to a report from the Centre for Economics and Business Research (CEBR), the two-year fixed rate is expected to rise to an average of 5.1 per cent in 2023 and 4.6 per cent in 2024.
The firm said that based on ONS figures, which suggest that around 2.5 million are due to refix this year and one million are on variable rates, mortgage holders looking to renegotiate in the next two years could see their payments rise by around £8.7bn due to “tighter monetary policy”.
It estimated that around 28 per cent of refixers will opt for a two-year deal and the rest will choose a five-year fixed rate.
This is broken down with the annual cost of mortgage for refixers could up by £3,900 in 2023 and £3,200 for 2024.
Biggest and smallest increases
The report said that those living in London would experience the largest increases for refixers with mortgage costs jumping by around £1.8bn.
This is broken down by the annual cost of a mortgage for refixers rising by £7,300 in 2023 and £5,900 in 2024.
This was followed by those refixing in the South East, which was estimated at around £1.7bn. CEBR projected that the annual increase in the annual cost for refixers would be £5,400 for 2023 and £4,400 for 2024.
Northern Ireland and the North East were at the other end of the scale, coming to £126m and £159m increase in mortgage costs respectively.
For Northern Ireland, this was divided into projected annual mortgage cost rises of £2,400 in 2023 and £1,900 in 2024, whereas for the North East this was split into rising annual cost of £2,200 in 2023 and £1,700 for 2024.
‘Substantial strain on incomes’
The report added: “Our estimates reveal a substantial strain on incomes across the UK that is yet to be fully felt. In other words, while the Bank’s tightening cycle might be nearing its end, the impact on households is only just beginning.
“With mortgages often occupying the most significant portion of household expenses, our estimates underscore the grim reality of rising rates, which will exert further strain on already stretched incomes, and hence the wider consumer economy, well into 2024.”
