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Brokers said homeowners coming to the end of fixed-rate deals over the last 18 months have increasingly turned to short-term fixed-rate loans on the expectation that interest rates would soon be falling again.
David Hollingworth, of L&C Mortgages, said the proportion of homeowners locking in rates for only two years has “broadly doubled” as interest rates have climbed.
Mr Hollingworth said: “In the last 12 months there has been quite a stark shift in the number of borrowers opting for two-year fixed rates. Last year, it would have been around 30pc or below. That proportion has risen markedly this year to in excess of 50pc.”
He added: “That will certainly have been predicated on the hope that rates will have fallen back by the time their deals come to an end.”
Expectations for how high interest rates will climb and how long they will stay there have been steadily increasing this year.
City traders expect the Bank Rate will peak at 5.75pc, up from 5.25pc today, and will still be at 5.5pc by August 2024.
370,000 households moved onto new mortgage deals with different lenders in the 12 months to March 2023, while 1.3 million took out new deals with their existing lenders, according to data from UK Finance.
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