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July 12, 2026
KEY INFORMATION
More than one million extra homeowners are now expected to face higher mortgage payments by the end of 2028 after mortgage rates increased following the conflict in the Middle East, according to the Bank of England.
In its latest Financial Stability Report, the Bank says more than five million households are now expected to see their mortgage payments rise when they remortgage. In December it expected around four million would be affected.
The jump comes after mortgage rates rose following the start of the conflict, with average mortgage rates on a 2 year fixed rate 75% LTV mortgage rising from 4.2% in December 2025 to 4.92% in July 2026, according to the Bank.
Here’s how the increase in borrowing costs could affect someone taking out a £200,000 mortgage over 30 years.
| Monthly payment at 4.2% | Monthly payments at 4.92% | Difference per month |
|---|---|---|
| £978 | £1,064 | £86 |
Use our mortgage repayment calculator to see how different interest rates could affect your monthly payments.
If your fixed rate mortgage ends within the next six months, now is the time to compare remortgage deals. You can secure a rate up to six months in advance, which means you can lock in a rate, then keep it under review in case rates improve before you need to switch.
If your new deal is going to be more expensive than your current one, don’t ignore it. If you do nothing and roll onto your lender’s standard variable rate (SVR), which averaged 7.13% in July 2026, you could pay much more.
Get fee-free mortgage advice from the award-winning expert advisers at Mortgage Advice Bureau.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Please note some branches of Mortgage Advice Bureau may charge a fee for mortgage advice if you go direct. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed. So make sure you use this site, this form or phone number for fee-free advice.
“In light of the fact that even more people are going to be affected by rate increases on their remortgage, it is more important than ever that people are organised and seek advice as early as possible, and certainly up to six months before their current deal ends.”
“One thing I like to constantly remind people of is that your adviser should be able to offer you something called a ‘price match’ and that means you can secure a rate up six months in advance with your adviser and their team regularly checking the rate for you and switching it if rates get better.
“If rates do continue to increase, that way you have your rate locked in and you know the worst case scenario. Your rate switch can happen all the way up to completion so please always make sure you ask your adviser if they offer that service as standard.
“So don’t try to hedge the market yourself and wait for the ‘right time’. The right time is six months before so you’re nice and organised and you can then hedge the market while having a secure rate in place.”
If you’re worried about higher mortgage payments, there are steps you can take. “There are always things your adviser can do and talk through with you, such as looking at ways increase your term, though this will cost more overall, and they can look at part interest-only to slightly reduce the monthly payments,” explains our mortgage expert Sarah Tucker.
It’s also important that mortgage borrowers know about the Mortgage Charter, which our expert Sarah recently rechecked with Downing Street.
“If you really are concerned, your adviser will talk you through how you can speak to your lender,” adds Sarah.
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