Almost half a million homeowners face a mortgage rate jump in 2025

Homeowners face higher rates when remortgaging

New research by Compare the Market reveals 469,192 homeowners who took out mortgages in 2020 are facing a substantial increase in their monthly payments, as they come off five-year fixed-rate deals with average interest rates of 2.11%. Our analysis is based on a Freedom of Information request to the Financial Conduct Authority and data from the Bank of England.

Homeowners coming off five-year fixes will typically find that mortgage rates have increased significantly since 2020.

Bank of England figures show the average standard variable rate (SVR) was 7.13% at the end of March 2025. Based on an average mortgage debt of £178,523, any of these homeowners who move onto their current lender’s SVR could see their monthly payments rise to £1,227 – a £510 increase. This is equivalent to paying £15,319 annually compared to £9,195 on their previous five-year fixed-rate deal.

There are potential savings to be made by homeowners who shop around for a new mortgage deal, rather than opt for their lender’s SVR when their initial mortgage term comes to an end.

Switching from the current average SVR (7.13%) to a new five-year fix with an average rate of (4.33%) could result in in savings of up to £3,618 per year. Similarly, switching from the current average SVR to the average two-year fixed rate (4.60%) could save homeowners up to £3,290 annually on their repayments compared to the average SVR.

How higher rates impact monthly mortgage payments

With the Bank of England’s decision to cut the base rate on 8 May, mortgages rates have declined in recent weeks. However, even if they shop around, homeowners coming off five-year deals are still likely to face higher monthly repayments than when they fixed in 2020.

If homeowners move to a new five-year fix with an average interest rate, they could see monthly repayment increase by £209. On a new two-year fix, payment could increase by £236 per month. The costs will depend on the individual’s personal finances and any additional product fees as these vary by lender and product.

_{*Based on an average mortgage debt of £178,523 per household and 25-year term **Please note this table is a rate comparison only. It does not take into account individual circumstances and additional product fees as these vary by lender and product. Additional fees may be added onto the final loan amount. When considering remortgaging, it is worth asking for a breakdown of any additional costs by getting in touch with your lender.}

Endorsement

“Our research shows that around half a million homeowners locked in a five-year fix in 2020 when rates were low during the pandemic. Securing these deals may have saved households a significant amount of money over the past five years. However, as they reach the end of their fixed term, these households will now face a substantial jump in mortgage costs.

For any homeowners coming off a fixed-rate mortgage this calendar year, it’s worth shopping around online soon and seeing what other deals are available, as this could potentially save thousands in annual repayments compared to going onto the SVR. You can sometimes book in a new rate up to six months before it’s due to start, and even if your deal expires towards the end of the year, it’s worth understanding the market now so you’ve all the info to hand when it’s time to act.

While you can compare online, it’s also a good idea for homeowners to speak to a professional mortgage adviser to be as informed and confident as possible in their financial decisions if they don’t understand what can be a complex market. Even as someone who knows the market, I would use a broker, as they can have access to deals or crucial lending criteria not available to the general public.”

Guy Anker, Personal finance and insurance expert

Advice on your mortgage options

Homeowners who are concerned about rising mortgage repayments should speak to a professional mortgage adviser. Compare the Market has partnered with London & Country Mortgages Ltd to provide fee-free mortgage advice.

Depending on their circumstances, homeowners may be able to extend their mortgage term, make an early lump sum payment, or move to an interest-only mortgage to lower the cost of their monthly repayments.

David Hollingworth, Associate Director at the broker L&C Mortgages, says: "Although many homeowners have had to deal with the payment shock of their ultra-low fixed deal ending, fixed rates have improved recently as the rate outlook has improved. While this will ease some of the pain, hundreds of thousands will still be steeling themselves for a steep hike in their rate as their fix ends.

“There could be temptation to wait in the hope of lower rates to come but that carries the risk of falling onto a sky high standard variable rate. With uncertainty in the market and rates constantly moving, it can be a confusing time for borrowers.

"Seeking advice in good time, will allow homeowners to secure a deal, protecting against any turnaround in pricing but still having the chance to review before the switch and take advantage of lower rates, if there is further improvement.”

_{Note: This is a news story, relevant in the moment and the weeks after, so we won't be updating it over a longer time period.}