Mortgage Shock Looms for UK Homeowners as Fixed-Rate Deals Expire

As fixed-rate mortgage terms come to an end, many UK homeowners could face sudden repayment hikes, with some seeing annual costs increase by nearly £5,000.

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Mortgage Shock Looms for UK Homeowners as Fixed-Rate Deals Expire. Credit: Canva | en.Econostrum.info - United Kingdom

Thousands of UK homeowners are expected to face sharp increases in mortgage repayments over the coming months, driven by the expiration of existing fixed-rate deals and a persistent gap between base and market interest rates.

Despite the Bank of England’s decision to lower its base rate to 4.25%, most lenders continue to apply significantly higher Standard Variable Rates (SVRs), exposing borrowers to a substantial financial hit.

According to GB News, many households could see their monthly repayments surge by hundreds of pounds, triggering renewed concerns about affordability and debt resilience across the housing market.

Surge in Repayment Costs Expected in 2025

Research from TallyMoney shows that approximately 1.6 million fixed-rate mortgages will expire in 2025, with an average of 4,384 deals ending each day. Those who fail to secure a new deal risk being moved onto significantly more expensive rates.

Borrowers coming off a typical fixed-rate deal—secured during periods of low interest rates—could see their monthly repayments rise from £814 to £1,219, resulting in an annual increase of £4,860. The change could occur almost overnight, drastically impacting household finances.

Early 2020 Deals Face Steep Increases

Borrowers who locked into five-year fixed deals in March 2020, when the average interest rate was 2.74%, are likely to experience the greatest shock. That cohort benefitted from historically low rates and may now face terms nearly triple in cost.

Using the average UK house price in 2020 (£235,637) with a 75% loan-to-value (LTV), repayments break down as follows:

  • At 2.74% (2020 rate): £814/month
  • At 5.18% (current average two-year fix): £1,007/month
  • At 5.10% (current average five-year fix): £1,001/month
  • At 7.58% (current average SVR): £1,219/month

Six Per Cent of Borrowers Already Affected

According to the research, 540,000 homeowners—around six per cent of all mortgage holders—are already on their lender’s Standard Variable Rate (SVR). That number is expected to rise sharply as more fixed-rate deals mature throughout 2025.

While the Bank of England’s base rate currently sits at 4.25%, most lenders’ SVRs are well above this benchmark, averaging 7.58%. This wide spread reflects institutional pricing models and risk buffers, but results in considerable added cost to consumers.

Full Breakdown of Svr Rates by Lender

TallyMoney’s data reveals substantial variation in SVRs across major lenders. The list below presents rates in descending order, illustrating the disparity faced by borrowers:

LenderSVR
Metro Bank8.00%
Lloyds Banking Group7.99%
Leeds Building Society7.99%
TSB7.74%
Bank of Ireland7.64%
NatWest7.49%
Yorkshire Building Society7.49%
Virgin Money7.24%
Co-operative Bank7.12%
Coventry Building Society7.09%
Nationwide6.99%
Santander6.75%
HSBC6.74%
Barclays6.24%
Skipton Building Society6.50%

Despite some variation, all SVRs remain substantially higher than the base rate, adding pressure on households that do not refinance proactively.

Expert Advice: Act Early, Review Finances

Alastair Douglas, CEO of TotallyMoney, urges homeowners to take action before their fixed-rate deal ends:

“If you’re a homeowner, then open your banking app or dig through your statements to find out when your existing deal is ending. You can often do it up to six months in advance, helping you to avoid the dreaded standard variable rate.”

He emphasises the importance of proactive engagement with lenders:

“Contact your provider as soon as possible. The Government has told lenders to support borrowers, and to offer them personalised solutions to help them manage their finances.”

Douglas also recommends reviewing your credit file:

“Check your credit report to ensure everything is accurate and up to date.”

He adds:

“Acting early could help avoid missed payments, damage to your credit score, or in the worst cases, home repossession. With thousands facing payment shocks daily, being prepared could save homeowners thousands of pounds each year.”

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