Some 3.9 million mortgage holders still to face impact of higher rates, BoE says

by Aaron Strutt

Dec 01 2025

Official figures show that around 3.9 million households – about 43% of all mortgage accounts – will move onto higher rates and face increased monthly repayments.

In its December Financial Stability Report, the Bank of England’s Financial Policy Committee (FPC) noted that the full impact of higher interest rates has not yet been felt across all mortgage holders. Since rates began rising in the second half of 2021, many borrowers have already refixed onto more expensive deals. Although recent and expected reductions in Bank Rate should lower payments for most households on variable rates, as well as for those currently fixed above today’s market rates, not everyone will benefit.

According to the report, a third of mortgage accounts—around three million households—are expected to see their payments fall over the next three years, in line with expectations from July’s outlook. However, many others will see their costs rise as the remaining effects of past rate increases feed through. Overall, 43% of mortgage accounts (3.9 million households) are expected to refinance onto higher rates during this period.

For a typical owner-occupier coming off a fixed-rate deal within the next two years, monthly mortgage payments are projected to rise by an average of £64—an 8% increase—with some households facing significantly larger jumps.

Aaron Strutt, product director at Trinity Financial, says: “It is almost impossible to guess what will happen in the mortgage market with regard to pricing, but fixed rates have been getting cheaper for quite some time, which is positive news. Many homeowners will be relieved to hear the Bank of England base rate may well come down in December and we expect rates to get better over the coming months. If many of the 3.9 million borrowers shop around for a new mortgage deal, rather than ending up paying 8% more like the BoE predicts, they may well lower their monthly mortgage costs.

"Two-year fixes are cheaper than five-year fixes at the moment. Santander has great two, three and five-year fixes starting from 3.55%. It is generally best to start looking for a new mortgage around four to six months before your deal expires, so you know what’s happening to rates, and you can get a new rate sorted out. You can always switch to a cheaper deal if and when it is available. Alternatively, a good broker, like one of Trinity's mortgage experts, will monitor the market for you and let you know if better deals are available, especially with the lender you have agreed to go with. This needs to happen a good few weeks before your new mortgage completes."

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