More than 1.4 million households in the UK are facing the prospect of rising interest rates when they renew their fixed mortgages in 2023.

A majority 57% of the fixed rate mortgages in the UK coming up for renewal this year have been fixed at interest rates below 2%, data from the Office for National Statistics (ONS) has shown.

The ONS highlighted that those deals that are due to mature through the course of 2024 will be from two-year fixed rate deals made in 2022 and five-year fixed rate deals made in 2019, when mortgage rates were generally higher than 2%.

According to mortgage expert at Quilter, Karen Noye, those with a fixed rate mortgage coming to an end this year will likely have been “shielded” from the rise in interest rates so far, but warned those households now face a “significant increase” in their monthly payments when they come to renew.

“This could rapidly become unaffordable for many people – particularly if they still have a high loan to value,” Noye said. “And this is all in addition to eye-watering heating bills and food costs soaring, which will serve to make this winter in particular and the rest of this year difficult for millions.”

According to the ONS estimations, there are over 350,000 fixed rate mortgages that will have to be renewed in the first quarter of 2023 alone.

“While interest rates have now dipped slightly compared to the highs seen in the aftermath of the mini-Budget, they are still significantly higher than the rates the majority will have previously been paying and many will soon feel a real squeeze on their finances as a result,” Noye added.

“Given the high interest rates – many of which still sit around 6% – those looking to refix may well be more tempted to opt for a tracker mortgage rather than fix at the current levels, particularly after Rishi Sunak announced inflation is likely to half this year, which could mean that the Bank of England will not need to continue hiking interest rates.”

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