Some 1.8 million fixed-rate mortgages are due to end, according to UK Finance.
Many of these homeowners locked into ultra-low deals in 2021, when typical fixed rates were closer to 2.5%.
Even with rates now falling, those deals are long gone and very unlikely to come back.
For many mortgage borrowers, this means a sharp rise in payments is unavoidable.
How much higher are today’s rates?
Moneyfacts shows that while today’s rates are falling, they remain much higher than those ultra-cheap fixes of five years ago.
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As of December 2025, the average two-year fixed rate was 4.86% and the average five-year fixed rate was 4.91%.
The default standard variable rate is on average 7.27%. That means if you are coming to the end of a fixed, discounted or tracker rate, doing nothing is probably your worst option, as it will mean much higher payments.
While all of these rates are down significantly from their 2023 peaks, they are still way higher than what many borrowers secured four or five years ago.
Borrowers who fixed in 2023 or 2024, often at 5–6%, may actually see payments fall next time. But for those rolling off 2021 deals, the increase will be sharp.
Real-term rises
A sharp rise in rates could mean a monthly increase of around £270 on a typical mortgage, or £3,200 a year.
For example, a £250,000 repayment mortgage over 25 years at 2.5% which was typical in 2021 would cost around £1,120 a month.
At 4.5%, which is close to the current average fixed rates, your monthly repayment would be around £1,390 a month.
For many households, that’s a big squeeze on the budget, even if it’s just about manageable.
We already know that borrowers coming off 2021 five-year fixes will be hit hardest, and households that are already under financial pressure will struggle most.
The Bank of England expects 3.9 million households to refinance onto higher rates over the next three years. But that doesn’t tell the whole story. It also expects around a third of mortgage holders, roughly three million households, to see their monthly payments fall over the same period.
In other words, a two-tier remortgaging market is emerging, where some borrowers finally see relief as rates ease, while millions of others are only just beginning to feel the full impact of higher interest rates.
What’s coming next?
The Bank of England cut the base rate to 3.75% in December 2025, its fourth cut in the past year and down from its peak of 5.25 in 2023.
However, experts expect further cuts to be gradual, not dramatic, with many predicting base rate around 3.25% by the end of 2026. Some, such as Capital Economics and Morgan Stanley go further, forecasting that base rate will be down to 3% at the end of this year.
It means mortgage rates are likely to settle in the 4% to 4.5% range, rather than falling more dramatically. Rachel Springall, finance expert at Moneyfacts, explains: “Those who locked into a cheap fixed deal five years ago will need to accept that they will have to cover higher repayments, even as rates continue to edge down.”
You may not be able to avoid high rates but you can minimise the bad news by taking a few proactive steps.
What to do if your rate is rising
- Plan ahead
Most lenders let you secure a new deal four to six months before your fixed rate ends. Bagging a deal early gives you reassurance and often flexibility if rates improve further. If you use a broker, they will proactively check rates to see if something better comes along.
- Consider a product transfer
Product transfers – where you switch to a new mortgage deal with your existing lender – are quick, simple and avoid affordability checks.
NatWest was awarded Best Product Transfer Lender at the recent Your Mortgage Awards
- Compare remortgage deals too
Even small rate differences can save thousands over time. It’s worth checking both what your current lender can offer and what else is available across the market.
NatWest was also awarded Best Remortgage Lender at the Your Mortgage Awards and the bank makes it easy to switch to them.
- Overpay if you can
Overpaying while still on a low rate reduces the balance before the jump. If you can afford regular or lump sum overpayments it’s worth doing the sums or asking your adviser if it’s a good option. - Extend the term if needed
This lowers your monthly payments, although because you’ll be repaying your mortgage for longer, it increases the total interest you’ll pay back. But, for some, it’s a useful tool to keep payments affordable. - Speak to your lender if you’re worried
Under the Mortgage Charter, lenders must offer support such as term extensions and temporary interest-only options. Halifax, named Best Lender for Service at the Your Mortgage Awards, is a signatory to the Charter and will talk you through all your options. - Don’t panic if your credit isn’t perfect
If you have a credit blip, you might find it harder to get a mortgage from mainstream lenders. Specialist lenders like Pepper Money, which won Best Credit Repair Mortgage Lender at the Your Mortgage Awards, cater for borrowers with recent credit blips or other non-standard circumstances. - Avoid the SVR
Doing nothing means you will automatically move to your lender’s standard variable rate, which is likely to be much higher than any new deals you can access.That’s why it’s so important to be proactive.
Rates are falling, competition is back, and support is available. But the truth is that higher payments in 2026 are likely for many who are switching from a five-year fixed rate.
The key to minimising any rate hikes is planning early, understanding your options, and getting advice before your deal ends.
