Half a million homeowners face £510 mortgage rate increase

New research by Compare the Market has shown that 469,192 homeowners who took out mortgages in 2020 are facing a substantial increase in monthly payments as they come off five-year fixed-rate deals that had 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.

However, 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 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 on their mortgage repayments compared to the average SVR.

Mortgage rates declined in recent months after the Bank of England’s decision to cut the Base Rate on 8th May. However, the 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 their monthly repayment increase by £209. On a new two-year fixed rate, 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.

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.”

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.”

Average Mortgage Repayments:

	2020 Five Year Fixed Rate	2025 Standard Variable Rate	2025 Two Year Fixed Rate	2025 Five Year Fixed Rate
Average interest rate	2.11%	7.13%	4.60%	4.33%
Monthly repayments	£766	£1,277	£1,002	£975
Annual repayments	£9,195	£15,319	£12,029	£11,702
Annual saving compared to SVR:	£6,124		£3,290	£3,618
Monthly savings compared to SVR:	£510		£274	£301
Monthly cost change compared to 2020:		£510	£236	£209
Annual cost change compared to 2020		£6,124	£2,834	£2,506