One million more homeowners face higher mortgage payments after mortgage rates rise

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

How much will the higher mortgage payments cost households?

• The typical household coming off a fixed rate in the next two years is expected to see their monthly mortgage repayments increase by £45.
• The Bank says ‘this is significantly smaller than increases experienced over the last few years’, when compared to a typical rise of £120 for those getting a new deal between the end of 2022 and end of 2024.
• However, this is just an average and many households face much higher mortgage payments, especially those who took out a fixed rate mortgage before interest rates began increasing from 2022.
• The Bank says that nearly 750,000 households that are paying less than 3% interest will be rolling off fixes in 2026 and will see an average increase of £170 per month in repayments. Its figures also show that more households will see repayments increase by more than £500 a month.
• The report also highlights that nearly 2 million fewer borrowers are expected to see their repayments fall by the end of 2028, compared to its December forecast. For more on where rates could go next, read our guide to mortgage rate predictions.

What to do if your mortgage rate is increasing

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.

Need help finding a new deal? Get fee-free mortgage advice from the award-winning expert advisers at Mortgage Advice Bureau. Compare deals or speak to an adviser today.

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