Up to 971,000 mortgage holders who secured low interest rates in 2021 are bracing for a steep rise in monthly repayments as their five-year fixed terms expire. Industry experts warn the shift could cost households an additional £2,124 annually, triggering concern among lenders and consumer groups.
This large wave of fixed-rate renewals comes at a time of ongoing volatility in the mortgage market, with rates stabilising but remaining well above historic lows. The looming financial strain is expected to impact borrowers across the UK, particularly those unprepared for the end of their current deals.
Five-Year Fixed Mortgage Deals Set to Expire
According to Compare the Market, a total of 971,105 five-year fixed-rate regulated mortgages were taken out in 2021, during a period when interest rates had dropped to historic lows. At that time, it was common for homeowners to secure rates below 2%, locking in affordable monthly payments. The data, obtained via a Freedom of Information request to the Financial Conduct Authority (FCA), shows that many of these deals are due to mature throughout 2026.
Since then, interest rates have fluctuated significantly. The Bank of England’s base rate peaked following a series of hikes but was lowered to 3.75% in December, creating a slightly more favourable lending climate. Nevertheless, the current remortgage market remains markedly different from five years ago. According to L&C Mortgages, the average of the lowest five-year fixed remortgage rates offered by the ten largest lenders stood at 3.89% in January 2026.
This shift means that borrowers who took out a mortgage in 2021 and are due to remortgage now could see annual repayment increases of up to £2,124, based on typical 2021 house prices and a 25% deposit, as calculated by Compare the Market. Those who fail to secure a new fixed rate in time may revert to their lender’s Standard Variable Rate (SVR), where costs are often significantly higher.
Lenders Urge Early Action to Mitigate Rising Costs
As millions approach the end of their fixed-rate terms, mortgage brokers and lenders are advising homeowners to act well in advance. According to David Hollingworth, associate director at L&C Mortgages, many of those who secured ultra-low rates five years ago have been shielded from the impact of rising interest rates until now. He noted that while a rise in payments is unavoidable for most, improved lending conditions since last year may help limit the extent of the increase.
Sajni Shah, a mortgage expert at Compare the Market, echoed this advice, stressing that “even small differences in rates can add up to thousands over the life of a term.” She encouraged borrowers to compare offers and seek competitive rates as early as possible to soften the impact of rising costs.
UK Finance has reported that around 1.8 million fixed-rate mortgage deals will expire in 2026, with approximately half of those being five-year terms. The organisation’s spokesperson noted the importance of seeking guidance if repayment becomes difficult. “The earlier you contact your lender, the more options they will have available,” they said.
Borrowers are also being advised to consider the full cost of remortgaging, including fees and other charges, not just the interest rate. Brokers emphasise the need for preparation and paperwork, particularly for self-employed borrowers or those with less straightforward financial profiles.
