Nearly 500,000 homeowners are set to see their mortgage payments rise by an average of £510 as the latest round of five-year fixed-rate loans end this year.
New research by Compare the Market shows 469,192 homeowners who took out five-year mortgages in 2020 have been paying an average interest rate of 2.11%. Any of these homeowners who move onto their current lender’s standard variable rate (SVR) could see their monthly payments jump to £1,227 – a £510 increase – based on an average mortgage debt of £178,523. This is equivalent to paying £15,319 annually compared to £9,195 on their previous five-year fixed rate deal.
Homeowners coming off these fixed rate deals will typically have to pay more as mortgage rates have increased significantly over the past five years. The latest Bank of England figures show the average SVR was 7.13% at the end of March 2025.
Guy Anker, mortgage expert at Compare the Market, said: “Our research shows that around half a million homeowners locked in a five-year fix rate 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 rate, these households may now face a substantial jump in mortgage costs.”
However, homeowners who shop around for a new mortgage deal rather than opt for their lender’s SVR can potentially save money.
According to Compare the Market, switching from the current average SVR (7.13%) to a new five-year fixed rate mortgage with an average rate of 4.33% could result in up to £3,618 in savings per year.
Similarly, switching from the current average SVR rate to the average two-year fixed rate (4.60%) could save homeowners up to £3,290 annually.
Mortgage rates have dropped in recent months after the Bank of England cut the Base Rate from 4.5% to 4.25% in May.
Mr Anker continued: “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 an SVR.”
He noted that in some circumstances, some lenders let you book in a new rate up to six months before it’s due to start.
He added: “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.”
David Hollingworth, associate director at the broker L&C Mortgages, said: “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, rates are constantly moving, and some have edged back up, so 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.”
