Mortgages
Key insights
Just under a third of households have a mortgage, according to the government’s English Housing Survey, external.
What this means
About 500,000 homeowners have a mortgage that “tracks” the Bank of England’s rate. That means any cut means a reduction in the monthly repayments on their outstanding loan.
An additional 500,000 homeowners on standard variable (SVR) rates rely on their lender choosing to pass on any Bank rate cut.
But the vast majority of mortgage customers – some 87% – have fixed-rate deals. While their monthly payments aren’t immediately affected by a rate change, their future deals are.
As at 30 July, the average rate on a new two-year fixed deal was 5.62%, up from 4.83% at the start of March, according to the financial information service Moneyfacts.
For those looking for a five-year deal, the average rate was 5.66%, up from 4.95% over the same period.
The average two-year tracker rate was 4.51%.
About 800,000 fixed-rate mortgages with an interest rate of 3% or below are expected to expire every year, on average, until the end of 2027. Borrowing costs for customers coming off those deals are likely to rise sharply.
Mortgage calculator
You can see how your mortgage may be affected by future interest rate changes by using our calculator:
