Homeowners have raced to quit mortgage deals early to lock in cheaper terms, paying thousands in exit penalties in the process.
The number of borrowers that paid fees to leave deals has jumped by more than a third compared with before the pandemic, according to Yorkshire Building Society, a lender.
Homeowners have scrambled to lock in cheaper loans now before Bank of England interest rates rises force mortgage deals to become more expensive.
The building society recorded a 34pc rise in the value of “early repayment charges” made in the first two months of 2022, compared with the same period in 2020. There was a marginal increase compared to 2021, however then the stamp duty holiday had ignited a similar rush to move home while saving on tax.
Ben Merritt, of the lender, said: “Given the rising interest rate environment, it’s no surprise we’re seeing borrowers weigh up their options earlier than they would have done, as they try to get the best deal while deals are still relatively cheap.”
The average outstanding mortgage balance on a fixed-rate deal was £159,000, according to UK Finance, a banking trade body. A homeowner exiting a typical five-year deal 13 months early would have paid £3,180 in fees.
Chris Sykes, of mortgage broker Private Finance, said homeowners with a year or two left on their fixed-rate deals had paid the fees so they fix again for a long period of time. “People are doing it now due to rates rising so much. They are trying to secure rates and stability before things go up much more.”
Yesterday the Bank Rate was increased by 0.25 percentage points in a widely expected move. This followed two consecutive increases in December and February. Research consultancy Capital Economics has forecast it will hit 2pc in 2023, up from 0.75pc today.
