What to do if you need to remortgage

Homeowners face heftier mortgage costs as rates rise. High mortgage rates are proving a shock to hundreds of thousands of homeowners looking to remortgage in 2023.

Around 700,000 fixed-term deals are coming to an end in the second half of this year, according to calculations from the Office for National Statistics (ONS). 

The majority of these rates were secured below 2% – but current mortgages are priced significantly higher than they were two years ago, meaning borrowers coming to the end of their fixed term will likely face higher costs when they switch. 

Here, we explain what's happening in the mortgage market and provide a step-by-step guide to getting a good deal when remortgaging.

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What's happening to mortgage rates?

Thirteen consecutive increases in the Bank of England's base rate have resulted in higher costs for lenders and borrowers. The base rate is now 5%, having been just 0.1% in December 2021. 

Mortgage rates had been dropping after the fall-out from last autumn's mini-budget settled, but since May, deals have been back on the increase. This is because lenders fear the base rate will continue to rise.

As a result, if you're coming to the end of your fixed-term mortgage, it's likely your rate will be higher when you come to remortgage.

Data from Moneyfacts shows borrowers who took out a mortgage at 60% loan-to-value in November 2020 could get a rate of 1.1%. Whereas now, the cheapest interest rate comes in at around 5% for a five-year fix.

The graph below shows how mortgage rates, according to Moneyfacts, have changed significantly over the past 12 months.