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Should I switch to a fixed rate mortgage before rates increase?

With around 1.4 million mortgage deals ending this year, is now the right time to fix your mortgage before rates increase again?

A photo of Dom Limberg, the author

By Dom Limberg

Published on: 31 May 2023

4 min read

Should I switch to a fixed rate mortgage before rates increase?

Current UK interest rate4.5%
Review date22nd June
Expected rate4.75%

Economic experts believe that the Bank of England will increase the UK’s base interest rate in June, in the UK’s 13th consecutive interest rate rise. If this happens, it will inevitably lead to increasing costs again for variable rate mortgage holders around the country.

The cost of fixed rate mortgages soared last year, following instability in the mortgage market, caused by the government’s disastrous Autumn mini budget. Variable rate mortgages became a more attractive option for those wanting to avoid being tied into a high interest rate for the foreseeable future.

With around 1.4 million mortgage deals ending this year, is now the right time to fix your mortgage before rates increase again?

What could the interest rate change mean?: Another increase in UK interest rates will mean mortgage holders and anyone with finance agreements/loans could face significantly higher repayments moving forwards.

What is the difference between a fixed and variable rate mortgage?

A fixed rate mortgage is when a lender offers a set interest rate that will not change for a fixed amount of time. Popular choices for fixed rate mortgages include, 2 year fixed, 5 year fixed and 10 year fixed periods. These special rates can provide financial stability, as you cannot be surprised with a sudden interest rate increase.

A variable rate mortgage is when the amount of interest paid on your mortgage can differ from month to month. This option can provide more flexibility, and you can benefit if rates your lenders rates drop. If your lender increases their rates though, you could be faced with far higher monthly bills.

Types of variable rate mortgage:

  • Standard variable rate or ‘SVR’ mortgage: The interest paid on your mortgage will be set by your lenders default base interest rate. The lender can change this rate at their own discretion.
  • Tracker mortgage: The interest paid on your mortgage will follow the Bank of England’s base interest rate (currently 4.5% as of May 2023). This amount can be different to your lender’s standard variable rate.
  • Discount rate mortgage: The lender may offer a discount on their variable rate for a fixed amount of time. This will usually be a percentage discount e.g. their variable rate with a 2% discount.

Fixed rate mortgages have been the popular choice with buyers for years, as the predictable repayments allow homeowners to budget and plan their finances more easily The financial security offered by a fixed rate has made these mortgages the obvious choice for most people buying or remortgaging.

As mortgage rates rose last year, there became less and less of a gap between fixed rates and variable rates. In fact, there was a point you would pay less if you were on a variable interest rate.

Find out more – Fixed rate vs tracker rate mortgage: price gap widens

Can I change my variable rate mortgage to fixed?

The best fixed mortgage rates in the UK shot up after last year’s mini budget, jumping from 4.06% to 5.69%.

These rates had slowly been falling up until last month with the lowest possible rate being 3.79% (5 year fixed rate). These rates have started to creep up again, with 4.29% being the lowest rate available. With the Bank of England base rate predicted to reach as high as 5.5% this year, the amount of low interest fixed rates available is likely to be far lower by the end of 2023.

Choosing to switch to a new fixed rate deal now while rates are lower may be beneficial. As it seems likely that fixed rates could increase again in the next few months, it could be better to act sooner rather than later though you should assess your options carefully.

Available low interest fixed rates (less than 5% interest) include:

2 year fixed

LenderInterest rate (2 year fixed rate)
First Direct4.64%
Royal Bank of Scotland4.71%
Clydesdale Bank4.75%
Coventry Building Society4.77%

5 year fixed

LenderInterest rate (5 year fixed rate)
First Direct4.29%
Royal Bank of Scotland4.36%
Virgin Money4.44%

Note: All the rates quoted above are based on repayment mortgages worth £180,000 repaid over 25 years. These rates are accurate and available as of 31st May 2023.

How to switch from a variable to fixed rate mortgage

If you want to switch your mortgage, there are a few options available.

  1. Speak to your current lender to see if you can swap to a new deal (product transfer). Many lenders will allow you to select a new mortgage deal if you are within the last 6 months of your current mortgage. Locking in the rates available now can help you avoid potentially far higher rates 5 or 6 months down the line.
  2. Shop around and see which rates are available with new lenders (there may be better rates available elsewhere). You may be able to find better rates with a new lender. You should research all your options carefully, as this can be more complicated than staying with your current lender.
  3. Speak to a mortgage broker who can compare rates for you and offer support and guidance

Remember to think carefully before committing to remortgaging your home. You may benefit from switching to a fixed rate, but you also could lose out if variable rates drop lower than your fixed rate.

It is always advisable to speak to a mortgage specialist for advice before making big decisions about your mortgage. You may also have fees tied into leaving your current mortgage early such as exit fees or early repayment charges that you will need to budget for.


Financial Conduct Authority (FCA) – Switching in the mortgage market – an update – UK Mortgage statistics

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