Ditch Your Fixed Rate Early? What the Numbers Say
Verdict
With ERC and switch costs of £2,300 exceeding the £708 saving over 6 months, staying in your 5.5% fix is the stronger move.
Confidence: High
Break point: This verdict flips if the rate gap widens materially or ERC drops below 1.0%. The break-even point is 19.5 months of saving — only viable if you have that long remaining.
The exit cost decision
Ditching only makes sense when the gross saving over the remaining term exceeds the ERC and switch costs.
The £2,300 early repayment charge (ERC) is a one-time cost that outweighs the £708 savings over six months from switching to a 4.5% rate, given the 1.0 percentage point gap between your current 5.5% fixed rate and the available rate. By remaining in your current fix, you avoid the substantial upfront cost of switching, which would take over three years to recoup through monthly savings. Therefore, the financial logic is clear: staying put is the more prudent decision, as the immediate costs of switching far exceed the benefits of a lower rate.
The rate backdrop
Borrowers who fixed at the 2022-23 peak are paying well above current market rates, so the case for exiting has strengthened.
Since 2021, the Bank of England's rate rises have significantly impacted the mortgage landscape, with 2-year fixed rates increasing by 2.75 percentage points from historic lows, making refinancing less attractive for borrowers still locked into high fixed rates. For those with a 5.5% fixed mortgage, the early repayment charge (ERC) and switching costs averaging £2,300 far exceed the potential savings of just £708 over six months, reinforcing the financial rationale to remain in their current fixed rate. This scenario highlights that the costs associated with breaking the existing mortgage outweigh the benefits of switching to a lower rate, making it a more prudent decision to stay put.
Worked example
Assumptions (illustrative): £200,000 mortgage · 5.5% current fix · 4.5% available rate · 6 months remaining · 1.0% ERC
| Item | Amount |
|---|---|
| Monthly saving | £118/month |
| Gross saving over 6 months | £708 |
| Early repayment charge (1.0%) | −£2,000 |
| Switch costs | −£300 |
| Net saving | −£1,592 |
Staying in the fix saves £1,592 compared to ditching — the exit costs of £2,300 are not recovered within the 6-month remaining term.
This flips if ERC drops below 0.2% or if the monthly saving increases above £383/month.
When this flips
This flips only when the net saving after ERC and switch costs exceeds the break-even threshold. Below this threshold, the certainty of staying in the fix wins.
What to do next
| Your situation | Action | Why |
|---|---|---|
| Less than 6 months remaining on the fix | Stay and wait | ERC and switch costs almost always exceed the saving at this horizon |
| Rate gap is large and ERC has dropped to 0.5% or below | Calculate the break-even first | At very low ERC the math may still work — verify before deciding |
| You need to remortgage for other reasons | Check if ERC can be waived | Some lenders waive ERC on sale or in hardship — ask before paying |
| Fix expires within 3 months | Start shopping now, switch at expiry | Lock in the new rate now for a fee-free switch at the end of the fix |
Sources and provenance
- boe_mpr_2026_02.pdf
- boe_mpc_2026_03.pdf
Data as of: 2026-04-01
