Five Million Households Face Rising Mortgage Costs

More than five million UK households are set to face higher mortgage repayments when they refinance over the next two years. That figure comes from the Bank of England's Financial Stability Report, published in July 2026. It is up from the Bank's previous estimate of nearly four million, published in December. According to BBC News, the Iran conflict closed the Strait of Hormuz - a shipping lane responsible for roughly one fifth of global energy supplies. Oil and gas costs rose. Inflation expectations followed. Markets began pricing in further central bank rate increases.

How Far Rates Have Moved

The average two-year fixed mortgage at 90% LTV (loan-to-value) now sits at 5.32%, according to the Bank of England. That is approximately 75 basis points (0.75 percentage points) higher than December's reading. Moneyfacts data shows the two-year fixed rate climbed from 4.83% at the start of March 2026 to a peak of 5.90% on 12 April, before easing to 5.49%.

More than eight in ten mortgage customers hold fixed-rate deals, the Bank of England notes. That protection is time-limited. When the deal ends, borrowers face whatever pricing the market offers at that point.

For the typical owner-occupier rolling off a fixed rate in the next two years, the Bank of England estimates an average monthly increase of £45. That is the broad average. The range underneath is much wider.

Who Faces the Biggest Increases

Around 750,000 households are due to refinance by the end of this year. They took out mortgages before 2022, when rates were below 3%. The Bank of England estimates these borrowers face an average monthly increase of £170.

Those who got new deals between end of 2022 and end of 2024 face a typical rise of £120 per month, per Bank of England and BBC data. They entered a higher-rate environment already - the adjustment is smaller.

The revision from four million to five million projected households shows how quickly the picture shifted. If you want to understand where your current deal sits, the mortgage and broker guidance in Property Filter's finance section covers the key questions to ask.

What This Means If You Hold a BTL Property

For buy-to-let (BTL) investors, refinancing is not just a rate question. It means passing the lender's ICR (interest coverage ratio) stress test - a check that rental income covers 125% to 145% of the monthly mortgage payment at a stressed rate. With rates at current levels, that calculation produces different results than it did two years ago.

If your loan was stress-tested at 3.5%, your numbers may not pass a new lender's criteria today. Use the BTL stress test calculator at Property Filter to check your ICR before approaching lenders. A declined application leaves a footprint on your file.

The Bank of England has also proposed giving major lenders more flexibility with their capital buffers during periods of market stress. If adopted, this could improve lender pricing capacity. It remains at consultation stage.

Property Filter's free financial calculators cover ICR, stress test, and maximum loan in one place - useful if you are managing a portfolio heading into a refinancing window.

Key takeaways

• More than 5 million UK households face higher mortgage repayments by end of 2028 (Bank of England, July 2026)

• Average monthly increase for a typical owner-occupier rolling off a fixed rate: £45 (Bank of England)

• 750,000 borrowers coming off sub-3% deals this year face average increases of £170 per month (Bank of England)

• Two-year fixed rates peaked at 5.90% on 12 April 2026 and now sit at 5.49% (Moneyfacts)

• More than 80% of mortgage customers hold fixed-rate deals - exposure is deferred, not avoided (Bank of England)