By Emmanuel Nduka
Mortgage borrowers across the United Kingdom are set to face a significant rise in repayment costs as about 1.8 million fixed-rate home loans expire in 2026, triggering what analysts describe as a looming “mortgage shock”.
Data from UK Finance shows that borrowers who secured five-year fixed deals during the ultra-low interest rate period of 2021 will be the hardest hit. At the time, the Bank of England base rate stood at just 0.1 percent, allowing homeowners to lock in historically cheap loans.
With interest rates now significantly higher, those refinancing five-year deals are expected to see their monthly repayments rise by an average of £395. By comparison, borrowers coming off more recent two-year fixed deals taken in 2024 face a relatively modest increase of about £37 per month.
The surge in borrowing costs has been driven by global financial pressures, including the impact of the ongoing Middle East conflict, which has pushed up lender funding costs and forced banks to reprice mortgage products at higher rates.
Despite the pressure, about 94 percent of affected borrowers are still expected to pass lenders’ affordability stress tests. However, roughly 115,000 homeowners, largely those who locked into five-year deals in 2021, may struggle to qualify for new loans.
For borrowers unable to meet stricter criteria, switching to a new deal with their existing lender offers an alternative, though at higher interest rates. While wage growth and inflation may ease the burden for some, the refinancing wave highlights the growing financial strain on UK households as the era of cheap mortgages fades.
