French pointed out that the additional cost could be significant for many borrowers. “Someone taking out a typical two-year fix will find it costs hundreds of pounds more per month on average compared to just a few weeks ago,” he said.
“However, the real payment shock will be felt by those coming off older five-year deals, where rates have more than doubled, pushing up repayments by many hundreds of pounds per month.”
| Mortgage rate changes (Remortgage scenarios) | |||||
|---|---|---|---|---|---|
| Mortgage term & LTV | Old rate | New rate (2-yr fix) | Difference | Monthly difference | Annual difference |
| Remortgage from a 2-year fix – average rate | 5.80% | 5.89% | +9 bps | +£14 | +£168 |
| Remortgage from a 2-year fix – lowest rate | 4.46% | 4.79% | +33 bps | +£47 | +£564 |
| Remortgage from a 5-year fix – average rate | 2.77% | 5.89% | +312 bps | +£438 | +£5,256 |
| Remortgage from a 5-year fix – lowest rate | 1.23% | 4.79% | +356 bps | +£463 | +£5,556 |
| Source: Moneyfactscompare.co.uk. Note: Two-year average mortgage rate and lowest rate available to remortgage customers as per 1 April 2024. Five-year average mortgage rates and lowest rate available as per 1 April 2021 compared to cost of borrowing £250,000 over 25 years to average and lowest two-year fixed rate available to remortgage borrowers as per 14 April 2026. | |||||
For lenders and brokers, the combination of weaker growth and higher rates typically raises the risk of tighter affordability, slower purchase activity and elevated remortgage churn, while also increasing the chance of arrears among stretched households.
The IMF said the balance of risks remains to the downside, including renewed trade tensions and deeper geopolitical fragmentation, and argued that credible policy frameworks and international cooperation would be needed to navigate the shock.
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.