Almost half a million (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%, Compare the Market reveals.
Compare the Market found that if these homeowners move onto their current lender’s standard variable rate (SVR), monthly payments could jump to £1,227.
This represents a £510 increase, based on an average mortgage debt of £178,523.
It 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, the comparison website suggests that homeowners could make savings if they shop around for a new mortgage deal, rather than opt for their lender’s SVR when their initial mortgage term comes to an end.
It found that switching from the current average SVR 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.
In addition, 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.
While mortgage rates have been lowered by some lenders in recent months, 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, monthly repayments could rise by £209, while a new two-year fixed rate payment could increase by £236 per month.
Compare the Market mortgage expert Guy Anker says: “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.”
L&C Mortgages associate director David Hollingworth adds: “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.”
