I’m Buying Xmas Presents? UK Mortgage Hikes Hit 360,000 Homes
The Bank of England raised its base rate to 4% from 3.75%, and about 360,000 UK households come off fixed mortgage deals before year-end. Families in Leicester and London describe how higher repayments are cutting Christmas budgets, from children's gifts to the turkey.
The Bank of England raised its base rate from 3.75 percent to 4 percent this week, hitting some 360,000 UK households whose fixed mortgage deals end before the year is out. For many, saying I'm buying Xmas presents now comes with a smaller budget.
It is the central bank's first rate rise in more than three years.
Who faces higher bills
Financial Conduct Authority figures show 123,752 fixed-rate deals are due to end in November and another 236,973 in December. When the base rate rises, banks usually raise mortgage rates for customers quickly to offset their own higher borrowing costs.
Many of these homeowners locked in cheap deals in 2021, when the average five-year fixed rate was 2.59 percent. That average has since climbed to six percent, driven by soaring inflation and war in the Middle East.
On a £200,000 mortgage, monthly repayments would rise from £906 to £1,289. That is £383 more a month, or £4,596 a year.
Christmas cutbacks in Leicester
Donna Jones, 40, works at McDonald's. Her mortgage bill jumped last month by £350 a month, from £800 to £1,150, equal to two weeks' wages.
She lives in Leicester with her husband Matthew, a computer programmer, and five of their children. They moved onto a five-year fixed deal at 4.99 percent, up from 1.4 percent.
Jones will spend a maximum of £200 on each child, half of last year's amount. The family will have chicken instead of turkey, and there will be no crackers, pudding or Christmas breakfast fry-up.
"I lie awake worrying about how we’re going to pay the bills, let alone afford Christmas," she said.
A bigger jump in London
Daniela Sponder, from South East London, faces a rise of £663 a month in December. Her bill goes from £1,999 to £2,662.
She and her husband James had a five-year fixed rate of 1.27 percent. They are now on a three-year tracker mortgage at an initial 3.99 percent, the cheapest deal available to them. A tracker rate moves in line with the Bank of England's base rate.
City traders are pricing in four more rate rises over the next 12 months, so her bill could climb again. Sponder is spending £260 less on seasonal outings. She spent £150 on presents for her two children in 2025 and plans £50 per child this year.
David Hollingworth of mortgage broker L&C Mortgages warned about tracker deals: "We don’t know how high rates could climb."
