Around 750,000 homeowners in the UK are currently on mortgage deals with interest rates under 3%, and many of these deals are set to expire this year. When they do, the Bank of England estimates that monthly repayments will increase by an average of £170. This is not a one-off cost but a recurring monthly expense for the duration of the new deal.
The Bank of England now expects more than 5 million homeowners to see their monthly mortgage repayments rise by the end of 2028. This means a significant portion of mortgage holders could be affected.
Why is this happening?
A few years ago, mortgage rates were at historic lows, and many homeowners locked in fixed deals under 3% without hesitation. Since then, rates have climbed and settled at a higher level. When those cheap fixed deals expire, homeowners are not offered anything close to their previous rate; instead, they roll onto the current market rate, which is considerably higher.
The increase is simply the gap between the rate locked in years ago and the rate that exists today. For hundreds of thousands of people, this gap is about to become very real, very quickly.
How to check if this affects you
To find out if you are affected, check your mortgage offer letter or online account for your current interest rate and the date your fixed deal ends. If it's below 3% and ending this year, this applies to you.
Also, check how far away your renewal date is. Most mortgage providers allow you to lock in a new deal up to six months before your current one ends, so even if your deal doesn't finish until later in the year, you may already be able to act.
What to do about it
The biggest mistake people make is doing nothing and letting their deal lapse onto the lender's standard variable rate, which is almost always the most expensive option. If that has already happened, it's worth checking today.
If your deal is ending soon, start comparing new deals now, even if your renewal date feels far off. Rates change, and locking in early protects you if they rise further, while most lenders let you switch to a cheaper deal later if rates fall before you complete.
Talk to a mortgage broker, ideally a whole-of-market one, rather than going straight to your existing lender, so you can see what else is out there. Budget for the higher figure now, even before your new rate kicks in. Building the extra £170 (or whatever your specific number is) into your monthly budget ahead of time softens the shock considerably.
The mortgage jump is about to hit millions of household budgets over the next couple of years. The earlier you know where you stand, the more options you have. If you haven't checked your mortgage renewal date in a while, today's a good day to do it.
