Hundreds of Thousands of UK Homeowners Face Mortgage Shock as Fixed-Rate Deals Expire
More than 350,000 UK households are bracing for a steep rise in mortgage repayments this winter as five-year fixed-rate deals taken out during the era of ultra-low interest rates come to an end.
Analysis by bill management platform Nous shows that nearly half of all mortgages taken out between October 2020 and February 2023—when the housing market rebounded after the first Covid shock—were five-year fixed-rate deals. These borrowers were shielded from the peak of rate hikes in 2022 and 2023 but now face a significant payment shock as they refinance.
Sharp jump in repayments
Average five-year fixed-rate mortgage rates were just 1.88% in 2020, compared with around 5% today. For a typical £200,000 mortgage, monthly repayments are expected to rise by £333 to £1,169, adding almost £4,000 per year to household budgets.
Borrowers with larger loans face even sharper increases—on a £500,000 mortgage, monthly payments could climb by £833, adding almost £10,000 annually.
Lenders increase rates again
The mortgage market has seen renewed upward pressure on pricing in recent weeks. Major lenders including Nationwide, Halifax, and HSBC have all nudged up fixed-rate deals—typically by 0.2 percentage points—citing shifting market expectations about the Bank of England’s base rate trajectory.
While the Bank of England cut rates to 4% in August, weaker-than-expected economic data has led analysts to push back forecasts for further cuts until spring 2026.
Industry warnings
“Hundreds of thousands of homeowners are in for an unpleasant shock this winter,” said Greg Marsh, Chief Executive of Nous. “The era of ultra-cheap mortgages is over, and many households will be left thousands of pounds a year worse off. Rising mortgage costs are hitting at the same time as higher council tax, water bills, and energy prices.”
Mortgage brokers also warned that uncertainty is fuelling volatility in the market.
“Confidence was already fragile heading into the budget,” said Hina Bhudia, Partner at Knight Frank Finance. “Even small increases in rates translate into noticeably higher monthly payments for borrowers. These latest hikes won’t help sentiment, though they may prove short-lived if lenders adjust again before completion.”
Outlook for homeowners
Experts advise that borrowers approaching the end of their fixed-rate period should review options early, monitor rates closely, and consider switching deals if prices fall before completion.
With the autumn budget due on 26 November, housing and mortgage affordability are expected to be high on the political agenda as policymakers weigh further reforms to support households under pressure.
