As early 2026 approaches, approximately 69,000 UK households are preparing for a significant increase in their mortgage payments, with monthly costs rising by an average of £321. This surge is driven by the expiry of five-year fixed-rate mortgage deals secured during the Covid-19 pandemic, when interest rates were at historic lows.
Homeowners who locked in rates below 2% in January 2021—when the Bank of England’s base rate was just 0.1%—now face typical remortgage rates averaging around 4.9%. For someone with a standard £200,000 mortgage, this translates to repayments climbing from £836 to £1,157 each month.
Greg Marsh, CEO of Nous, highlighted the looming financial strain: “Tens of thousands of homeowners coming to the end of cheap five-year deals are in for an unpleasant start to 2026. They are only now feeling the impact of higher interest rates and may have to pay thousands more annually just to keep their homes.”
He advises borrowers to seek professional advice promptly to secure mortgage deals that best fit their financial situations.
Adam French from MoneyfactsCompare noted that if the Bank of England reduces the base rate to between 3% and 3.5% this year, average mortgage rates might drop to 4% to 4.5%. While this would provide some relief, it remains significantly higher than the exceptionally low rates many borrowers enjoyed throughout the 2010s. French cautioned, “Mortgage borrowers may see some savings, but it’s important to keep expectations realistic.”
Historically, mortgage rates have averaged about 0.8 percentage points above the Bank of England’s base rate, and this pattern is expected to continue.