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Nearly 1 million five-year mortgages could come up for renewal by 2026, according to one comparison website, with many homeowners likely to have locked in ultra-low rates.
According to data from the central bank, in 2021, a total of 971,105 five-year fixed-rate regulated mortgage loan products were opened across the country. Financial Conduct Authority (FCA) made a Freedom of Information (FOI) request on behalf of Compare Markets.
The total does not take into account mortgages that may be paid off early before 2026.
In 2021, in the low interest rate environment, five-year interest rates below 2% are widely used. Mortgage rates subsequently rose but have been falling slightly recently, with the Bank of England cutting its benchmark rate by 0.25 percentage point to 3.75% in December.
In January 2026, the average minimum remortgage five-year fixed rate among the top ten mortgage lenders was 3.89%, according to L&C Mortgages.
Compare the Market’s calculations suggest that higher rates could increase some households’ annual mortgage payments by as much as £2,124, based on average house prices in 2021 and someone with a 25% deposit in 2021.
Borrowers who move their five-year mortgage into a standard variable rate (SVR) at the end of the original mortgage deal may experience larger cost increases.
Sajni Shah, mortgage expert at Compare the Market, said many households “will be shocked” to see a surge in repayments, adding that when homeowners check out their remortgage options, “even small differences in rates can add up to thousands of dollars over the life of the term, so shopping around, comparing lenders and locking in a competitive rate can make a huge difference in keeping increases to a minimum”.
Borrowers need to consider the overall cost of a mortgage, including fees and interest rates.
David HollingworthAssociate Director, L&C Mortgages said: “Homeowner Banks that locked in ultra-low interest rates five years ago have been insulated from rate swings in recent years.
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“While rising payments are inevitable once the fix is over, the good news is that mortgage rates have improved significantly recently and are well below their peak.
“This will help limit rising interest rates but also makes it even more important to shop around for the best deal. Starting the process months in advance will help borrowers prepare for higher rates and enable a smooth transition to a new deal.”
The FCA’s product sales data only cover regulated mortgages, which generally include owner-occupier mortgages.
Buy-to-let and commercial mortgages are unregulated products and the FCA does not collect equivalent data for these products.
A spokesman for the Treasury said: “Around 1.8 million households will cancel their fixed rate agreements this year, and we expect around half of these will be five-year fixed rate agreements.
“The mortgage market is competitive and there is a wide range of options available and we encourage people to shop around or talk to their agent about the options that best suit their circumstances.
“If anyone is worried about their mortgage payments, your lender is here to help. The sooner you contact your lender, the more options they have and the sooner they can help you.”