Millions of homeowners are being warned to brace for a steep rise in mortgage costs next year, with experts saying many families could be hit by increases big enough to stretch already-tight budgets. The concern comes as a huge number of fixed-rate deals taken out during the era of ultra-low interest rates begin to expire in 2026.
For many households, this will be the moment they face what analysts are calling a “mortgage shock”. More than 970,000 five-year fixed mortgages were signed in 2021, a year when rates below 2% were common. Those deals protected borrowers from rate rises for half a decade. But they are now approaching their end, and the gap between what people were paying and what they will be offered next is far wider than anyone expected at the time.
According to Compare the Market, some households face annual repayment increases of up to £2,124, based on typical 2021 house prices and a 25% deposit.
The figures are based on regulated mortgages only and exclude loans paid off early.
Current market conditions underline the problem. Separate data from L&C Mortgages shows the average of the lowest five-year fixed remortgage rates from the UK’s 10 biggest lenders was 3.89% in January 2026, roughly double the rates many borrowers secured five years ago.
Mortgage expert Sajni Shah from Compare the Market said many people “will be shocked” when they see the offers available.
She warned that even small differences in new rates can add up to thousands over the full term of a mortgage. Her advice is to shop around, compare lenders and lock in a competitive deal early.
Some borrowers could face even harsher increases if they do nothing. Moving automatically onto a lender’s standard variable rate once a fix expires is usually the most expensive option, and experts say homeowners should avoid that if possible.
Rates have eased slightly in recent months. The Bank of England cut the base rate to 3.75% in December, but advisers warn that fees, charges and individual circumstances still play a big role in the overall cost of a remortgage.
David Hollingworth at L&C Mortgages said those who fixed five years ago were sheltered from the turbulence of recent rate rises.
He added: “Although a hike in payments is inevitable once the fix ends, mortgage rates have improved substantially recently.”
He urged borrowers to begin the remortgage process months before their current deal runs out.
The scale of the issue is also much broader. UK Finance says around 1.8 million households are expected to come off fixed-rate deals this year, half of which are five-year fixes.
The trade body is urging anyone worried about higher payments to speak to their lender early. They said the sooner people make contact, the more support options will be available.