Nearly one million households face higher mortgage payments this year

Almost one million households across the UK could see their monthly mortgage payments jump this year, as ultra-cheap fixed-rate deals taken out during the pandemic come to an end.

Back in 2021, mortgage rates were at historic lows. Many homeowners locked into five-year fixed deals with interest rates of less than 1%, helping keep monthly repayments manageable during a time of uncertainty.

But those deals are now expiring - and the cost of borrowing looks very different in 2026.

Why mortgage payments are rising

According to data from the Financial Conduct Authority (FCA), obtained through a freedom of information request by Compare the Market, a total of 971,105 five-year fixed-rate mortgages were taken out in 2021.

Some of these deals had interest rates as low as 0.91%.

Fast forward to today, and homeowners coming to the end of those deals are facing far higher rates. The cheapest available five-year fixed mortgage is now around 3.51%.

For someone with an average-priced home, that could mean their mortgage payments rising by around £282 a month, or more than £3,000 a year.

For many households already stretched by higher food, energy and council tax bills, this increase could be hard to absorb.

What to do if you can’t afford the increase

If your mortgage deal is ending and you’re worried about how you’ll manage higher payments, you’re not alone - and there are steps you can take.

1. Speak to your lender as early as possible

If you think you might struggle to keep up with repayments, it’s important to contact your lender before you miss a payment. Lenders are generally more willing to help when borrowers are open and proactive, and early action can help protect your credit file.

2. Ask about the Mortgage Charter

If rising mortgage costs are causing financial strain, it’s worth asking your lender about how the Mortgage Charter could help. This government-backed agreement is designed to help homeowners who are struggling due to higher interest rates and encourages lenders to offer short-term support.

Depending on your situation, this support could involve temporarily switching to interest-only payments or extending the length of your mortgage to bring monthly repayments down to a more manageable level. While these options may increase the total amount you repay over time, they can provide much-needed breathing space. Crucially, taking up support through the scheme should not negatively affect your credit file, as long as you engage with your lender early and stick to the agreed arrangement.

3. Ask about payment breaks or temporary support

Some lenders may also be able to offer payment breaks or reduced payments if you’re experiencing financial difficulty. These options aren’t suitable for everyone and can increase the overall cost of your mortgage, but they may help if you’re facing short-term financial pressure, such as a drop in income or unexpected expenses.

4. See if you qualify for Support for Mortgage Interest (SMI)

If you’re on a means-tested benefit such as universal credit, income support, income-based Jobseeker’s Allowance, income-related Employment and Support Allowance, or pension credit, you might be eligible for Support for Mortgage Interest (SMI). This is a government loan that helps pay part of the interest on your mortgage or certain home loans, but not the capital you owe. It’s paid directly to your lender and is secured against your home, meaning you’ll normally repay it - with interest - when you sell or transfer ownership of your property.

SMI isn’t a grant, and there’s usually a waiting period before it starts (three months on universal credit, or immediately on pension credit). The help is capped, typically up to £200,000 of mortgage capital (or £100,000 if you’re on pension credit), and the amount you get is based on a standard interest rate set by the government, not on your actual mortgage rate.

Taking on an SMI loan is a serious decision because it adds to your secured debt and affects your property’s equity, so it’s usually best considered alongside independent financial advice.

5. Review your wider budget

A rise in mortgage payments can have a knock-on effect on the rest of your household finances, making it even more important to review your wider budget. Taking a fresh look at your income and outgoings can help you understand where your money is going and whether there’s any room to adjust spending.

This process can also highlight whether you’re missing out on financial support, such as benefits or help with other priority bills like energy, water or council tax. Even small changes can add up over time, and having a clear picture of your finances can make it easier to decide which steps to take next and to have informed conversations with your lender.

Use our free budgeting tool to get started.

5. Think about longer-term options, such as downsizing

For some households, higher mortgage payments may prompt a bigger rethink. Downsizing to a smaller or more affordable home could help reduce monthly costs and free up money for other essentials. This is a significant decision and won’t be right for everyone, but it may be worth exploring if your current mortgage is no longer sustainable.

Support is available

If you’re unsure of where to turn, you don’t have to deal with mortgage worries alone. We can help you understand your options, prioritise your bills and create a plan that works for you.

Getting support early can make a real difference and help you regain control of your finances during uncertain times.