An estimated 135,000 mortgages on five-year fixed rate terms were taken out in the last three months of 2020 at rates near historic lows, analysis by Lloyds has highlighted.

The bank suggested borrowers whose current fixed rate deals are maturing in the next three months could avoid a collective £1bn bill if they act now.

Fixed rate deals during the final quarter of 2020 were available at under 2%, with longer term five-year loans an average of 2.4%.

Analysis by Lloyds showed that, based on an average 25-year loan advance of £210,000, monthly repayments on a five-year deal fixed at 2.4% were set at £932 in late 2020. With an interest only loan on the same terms, payments would be £420.

However, those deals are due to end in the closing months of 2025 and Lloyds has encouraged borrowers to act now and avoid unnecessary costs.

At the end of their fixed rate deals, some borrowers could see the interest rate they pay almost triple as they move on to their lender’s standard variable rate (SVR).

The current average SVR is around 6.9% and with a remaining debt of around £177,000, this would cause monthly repayments to jump to £1,361 per month – a rise of £429. For interest only loans, the monthly payments would increase by £788.

“While interest rates are higher than they were five years ago, for people coming to the end of their current fixed rate, taking early action can help minimise the jump in monthly payments they may be expecting,” commented mortgage director at Lloyds, Andrew Asaam.

“It's never been easier for people to switch lender to get a better deal. As well as a range of competitive remortgage products to help borrowers soften the effects of today’s higher rates.

“Acting now gives you the certainty of knowing you won’t see a bigger rise in your monthly payments than necessary, while still giving you the flexibility to choose another deal if rates continue to drop in the meantime.”

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