The Resolution Foundation published analysis estimating that households whose current fixed-rate mortgage deal expires in 2024 face an average annual increase in repayments of £2,900, assuming they remortgage on another fixed deal of a similar length1. The think tank told Full Fact it estimates the annual increase for households whose fixed-rate deals expire in 2023 would be only slightly lower, at £2,8001.
The £2,900 figure was used in Parliament by shadow chancellor Rachel Reeves, who said: "Average mortgage payments will be going up by a crippling £2,900 this year, so where does the Chancellor think families will get the money to pay the Tory mortgage penalty?"1. Full Fact's assessment is that the figure is not an average across all mortgages and not an estimate for this year1.
"the £2,900 figure actually refers to the estimated average annual increase in repayments for households whose current fixed-rate mortgage deal expires in 2024, assuming they go on to remortgage on another fixed deal of a similar length"
According to the Resolution Foundation, approximately 1.8 million fixed-rate mortgage holders have deals expiring in 2023, and a further 1.7 million fixed-rate mortgages expire in 20241. Together, Full Fact reports, this accounts for just under half of the almost 7.5 million mortgage holders in the UK whose mortgage payments are set to increase between 2021 and 20261.
The £2,900 figure does not include borrowers on variable-rate or tracker mortgages, which do not have a fixed interest rate and are more immediately affected by Bank of England rate changes1. The Resolution Foundation estimates around 1.7 million homeowners had these kinds of mortgages when interest rates first began increasing at the end of 2019, though some may since have switched to fixed-rate deals1. It told Full Fact it could not produce an estimate for how these mortgages might change over the course of this year, but projects they will also face "significantly higher repayments", with interest rates for floating rate mortgages currently predicted to peak in 2024 at a higher level than 2- and 5-year fixed rate deals1.
The figure also does not cover homeowners with fixed-rate deals running past 2024, who will not see any change in their monthly payment until their fixed deal expires1. Full Fact says it has not been able to find any reliable estimates for how average mortgage payments across all mortgages may change in 20231. The Resolution Foundation projects that by the end of 2026 almost all British households with a mortgage will have moved on to a higher rate, and estimates they will end up with annual mortgage bills £2,000 higher on average compared with December 20211.
All the figures are forward-looking predictions based on modelling and are average estimates; the amount by which an individual household's repayments change depends on factors including the size of the outstanding mortgage, the type of deal and when the mortgage is renewed1.
Why it matters for households
The estimates concern specific groups rather than all mortgage holders. The £2,900 figure applies to households whose fixed-rate deal expires in 2024 and who remortgage on a similar fixed deal; the £2,800 figure applies to those whose deals expire in 20231. Borrowers on variable-rate or tracker mortgages are not covered by either figure, and the Resolution Foundation has not produced an estimate for how their payments might change over 20231. Households with fixed deals running beyond 2024 see no change until their deal ends1.
For anyone whose fixed rate is due to end, the practical questions are what rate replaces it and what that does to the monthly payment. Our guides on what to do when your fixed rate ends and remortgaging set out the process, and repayment mortgages explained covers how repayments are calculated. The difference between deal types is covered in fixed rate mortgages explained, fixed or discounted rate mortgage? and fixed vs tracker mortgage: which suits you?.
What happens next
The Resolution Foundation projects that by the end of 2026 almost all British households with a mortgage will have moved on to a higher rate, with annual mortgage bills £2,000 higher on average than in December 20211. It also projects that interest rates for floating rate mortgages will peak in 2024 at a higher level than 2- and 5-year fixed rate deals1. No further dated steps are set out in the analysis.
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