Almost one million homeowners across the United Kingdom are bracing for a substantial financial adjustment in 2026 as their five-year fixed-rate mortgage deals, originally secured during a period of historically low interest rates, reach their expiration date. This looming challenge highlights a critical moment for household budgets nationwide.
The Scale of the Coming Mortgage Adjustment
According to data obtained by the comparison website Compare the Market through a freedom of information request to the Financial Conduct Authority (FCA), a total of 971,105 regulated five-year fixed-rate mortgage products were initiated in 2021. This figure represents a significant cohort of borrowers who now face the prospect of remortgaging at potentially higher rates, with the total excluding any mortgages that have been paid off early during the intervening period.
From Historic Lows to Current Market Realities
In 2021, the lending environment was markedly different, with sub-2% five-year fixed rates being widely accessible to borrowers. Since that time, mortgage rates experienced considerable increases, though they have been gradually declining more recently. This shift followed the Bank of England's decision in December to reduce the base rate by 0.25 percentage points, bringing it down to 3.75%.
Data from L&C Mortgages reveals that, as of January 2026, the average of the lowest remortgage five-year fixed rates offered by the ten largest mortgage lenders stood at 3.89%. While this represents an improvement from previous peaks, it remains substantially higher than the rates many homeowners secured five years prior.
Potential Financial Impact on Households
Calculations conducted by Compare the Market suggest that the transition to more expensive rates could increase annual mortgage payments for some households by as much as £2,124. This estimate is based on average house prices from 2021 and assumes the borrower initially provided a 25% deposit.
Borrowers who allow their five-year mortgage to automatically revert to a standard variable rate (SVR) upon the conclusion of their initial deal could encounter even more pronounced cost escalations. This underscores the importance of proactive financial planning.
Expert Advice for Navigating the Remortgage Process
Sajni Shah, a mortgage expert at Compare the Market, emphasised that many households "will be shocked" to witness the jump in their repayment amounts. She advised that "even small differences in rates can add up to thousands over the life of a term, so shopping around, comparing lenders and locking in a competitive rate could make a huge difference in keeping rises to a minimum."
David Hollingworth, associate director at L&C Mortgages, noted that homeowners who secured ultra-low rates five years ago have been "sheltered from the ups and downs in interest rates in recent years." While acknowledging that "a hike in payments is inevitable once the fix ends," he pointed to the recent improvement in mortgage rates as a mitigating factor.
Hollingworth further stressed the critical importance of comparison shopping, stating: "That will help to limit the increase, but it makes shopping around for the best deal even more vital. Starting the process several months in advance will help borrowers prepare for higher rates and enable a smooth transition to a new deal."
Broader Market Context and Regulatory Scope
It is important to note that the FCA's product sales data encompasses regulated mortgages only, which typically include owner-occupier mortgages. Buy-to-let and commercial mortgages, being unregulated products, are not captured in this equivalent dataset.
A spokesperson for UK Finance provided additional context, indicating that approximately 1.8 million households are due to exit fixed-rate deals this year, with an estimated half of these being five-year fixes. The spokesperson affirmed that "the mortgage market is competitive with a wide range of options available," and encouraged individuals to "shop around or speak to a broker about what is best for their circumstances."
The spokesperson also offered reassurance to those concerned about affordability, advising: "If anyone is worried about their mortgage payment your lender is here to help. The earlier you contact your lender, the more options they will have available and the sooner they will be able to help you."
As hundreds of thousands of UK homeowners approach this significant financial milestone, the consensus among experts is clear: early preparation, thorough comparison of available deals, and proactive engagement with lenders are essential strategies for managing the impending transition and mitigating its impact on household finances.
