Nobody is looking forward to the budget. Talk of cuts to services and hikes to various taxes are rife, and the big questions are not if financial pain is coming, but who will feel it the most.
People coming to the end of a fixed rate mortgage might have a special reason to be concerned.
Nearly a million homeowners whose mortgage deals are due to end in the next six months have been urged to secure new deals now, in case rates soar as a result of Chancellor Rachel Reeves upcoming financial rejig.
What’s the problem?
The steady series of rate cuts that the Bank of England were hinting at earlier in the year are now looking much less likely, thanks to inflation still running at 3.8% for the year to September. It was optimism earlier this year that was helping bring down mortgages. That optimism has faded away.
Experts are pinning the rise in rates on a gloomy outlook for the economy. Worries over what the Chancellor will announce in her November budget to fill a multibillion-pound gap in the public finances are increasing the worries.
It comes down to confidence. The view financial traders take on the direction the economy is heading tends to drive changes to mortgage rates. Lenders have to predict and prepare for the future when they arrange fixed deals that could last 5 years or more. If the budget is downbeat, with painful outlook and even more painful tax increases, market confidence will take a knock, and mortgage rates could head upwards.
What is the solution?
About 446,000 fixed deals are set to end in the final quarter of 2025 according to latest figures.
There will be some significant increases for those remortgaging even with current rates. Waiting until after the budget could mean rates that are higher still.
But there is some good news. Even if your current deal is not ending, you can protect yourself from rises by reserving a new rate up to six months in advance.
Arranging a deal does not mean committing to it – if rates get better in the meantime for reasons we can’t currently see, you can still switch to a, more suitable deal.
With so much uncertainty, it may be worth locking in a fixed rate now. If rates have fallen by the time the deal is due to start, you should be able to move onto a lower rate so won’t be any worse off, but if they have risen, you will be secure and relieved that you took action when you did.
What deal should you look for?
A two-year fix might be ideal for those who believe interest rates will start heading back down. It could also be appropriate if you are planning on moving house soon, as it is not always possible to take your loan. It could also be a good idea if you’re close to a lower LTV band after a few years of repayments and a rise in house prices.
A five-year fix might be more appropriate if you are happy in your home and looking for longer-term security. They might also work out cheaper when mortgage fees are factored in, as you would only have to pay one rather than two over the same period if you chose consecutive two-year fixes.
The most suitable deal depends on the size of your mortgage, your property plans and whether you are prepared to take a gamble on the way mortgage rates will move.
It’s a complicated decision, made more complicated by the number of deals on the market.
A call to us at Continuum could help you not only work out the kind of mortgage that’s most suitable for you, but get our expertise working to search the entire market to deliver it.
Don’t wait until the budget is upon us. Call and see if you could save today.
Consumer price inflation, UK: September 2025
Why borrowers may need to brace themselves if changing deal in 2025 | The Independent
The information provided in this article reflects the views of Continuum and is intended for general guidance only. It does not constitute a mortgage recommendation. Before making any decisions regarding your mortgage, you should speak to a qualified mortgage adviser who can assess your specific needs and situation.
Your home may be repossessed if you do not keep up repayments on your mortgage.
You may have to pay an early repayment charge to your existing lender if you remortgage.
