Should you switch to a fixed-rate mortgage?

OPINION: ‘Cheap’ mortgage deals may not be around for much longer as interest rates rise. The Money Edit’s Kalpana Fitzpatrick looks at whether 2022 is the year to fix your mortgage.

interest rate sign on a wooden block
(Image credit: getty images)

I saw a tweet last week from none other than Matt Lucas - yes, the comedian - sarcastically announcing how much of a ‘treat’ it was to receive yet another text from Barclays bank informing him that his mortgage payments were going up following the interest rate rise on 5 May.

I tweeted back, telling him he should have fixed his mortgage rate (he ‘liked’ it by the way, so maybe he agreed or is thinking about doing just that).

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But, shouldn’t we all be thinking about fixing? Is it time for homeowners not on a fixed rate to review their mortgage to save money? 

While the emergency interest rate cuts back in March 2020, which saw the Bank of England slash rates from 0.75% to 0.1%, was joyful news for those on standard variable rates and tracker rates, those on fixed mortgages were stuck with higher rates.

Fast-forward to 2022, and we are back to rates not seen since 2009, with the Bank of England rate now at 1%. 

Banks waste no time passing on the rate increase to mortgage customers - as Matt Lucas has kindly demonstrated to us all - but are not so quick to reward savers. Sadly, those customers usually have to wait weeks to see a rate rise filter through so they can start earning more on their savings accounts.

So, should you fix your mortgage rate and for how long? 

There's no easy answer. You could fix for two, four or even 10 years with some providers - or do nothing. Should we see another rate cut in the next year or so, you will have locked yourself into a higher rate. But if rates keep rising, then you may need to act quickly to secure a good deal because they are disappearing.

According to the data analyst Moneyfacts, the average two-year fixed rate is now above 3% for the first time in more than seven years.

As for how long you should fix, well that depends on a number of factors, such as whether you’re planning to move and your affordability.

I’m not a mortgage broker and every case is different, but I would say it is certainly worth speaking to a mortgage broker to see if you can save money by remortgaging to a fixed deal or moving to another deal if you are already on a fixed rate. If you’re six months or less away from your current deal ending, then now’s the time to explore your options, as you can normally lock in a rate in advance of your deal finishing.

Fixing can potentially save you money (sometimes quite a lot of money) - and it can also stop those unwelcome text messages telling you your mortgage costs are going up. 

Whatever you decide, the message is to act fast. 

Kalpana Fitzpatrick
Editor, The Money Edit

Kalpana is the Editor of The Money Edit.

She’s an award-winning journalist and author with extensive experience in financial journalism. Her work includes writing for a number of media outlets,  including national papers and well-known women’s lifestyle and luxury titles, where she was finance editor for Cosmopolitan, Good Housekeeping, Red and Prima.

She is the author of Invest Now: The Simple Guide to Boosting Your Finances (opens in new tab) - out December 2022.

She started her career at the Financial Times group, covering pensions and investments.

As a money expert, Kalpana is a regular guest on TV and radio; appearances include BBC One’s Morning Live,  ITV’s Eat Well, Save Well, Sky News and more. 

She was also the resident money expert for the BBC Money 101 podcast and co-author of the e-careers personal finance course.

A well-known money and consumer journalist, Kalpana also often speaks at events.

She is passionate about helping people be better with their money, save more and be smarter spenders.

Follow her on Twitter and Instagram @KalpanaFitz.