The 2025 Mortgage Expiry Time Bomb

Is your mortgage deal expiring? How many fixed rates are ending, and what it means for your finances?

2025 is here, and with it comes a potential financial crunch for many UK homeowners.

What’s happening in 2025

A significant number of fixed-rate mortgage deals are set to expire, potentially exposing borrowers to significantly higher interest rates.

Understanding the scale of this issue and its potential impact on personal finances is crucial for homeowners to prepare.

Just how many mortgages are expiring in 2025?

While precise figures are difficult to pin down due to the constantly fluctuating market, industry estimates paint a concerning picture.

The average standard variable rate (SVR) is 8.24%, according to Uswitch, a comparison site.

The Bank of England estimates that one million mortgage products are expiring this year. These expirations represent a substantial portion of outstanding fixed-rate mortgages, meaning millions of homeowners could face increased monthly payments.

Why?

This concentration of expired mortgage deals stems from the surge in fixed-rate mortgages taken out in previous years, often at historically low interest rates. Many homeowners opted for two—or five-year fixed deals, and a large portion of these are due to mature in 2025.

The onset of Help to Buy and low deposit schemes helped fuel the demand in recent years.

What will the impact of mortgage expiry be?

The impact on personal finances could be considerable. As fixed-rate deals end, borrowers will likely be forced onto their lender’s Standard Variable Rate (SVR) or remortgage onto a new fixed-rate deal.

With interest rates having risen significantly recently, both options could result in substantially higher monthly repayments.

For example, a homeowner who secured a £200,000 mortgage at a 5-year fixed rate of 2% in 2020 might face rates of 4.5% or more when their deal expires.

At the new rate of 4.5%, they would have an estimated balance of £180,000 over 20 years and would see an increase of about £300 per month.

This can significantly strain household budgets with the increasing cost of living.

Read about having a mortgage in Later Life

This impending mortgage crunch has several wider implications:

  • Increased affordability pressures: Rising mortgage costs will squeeze household finances, potentially leading to reduced discretionary spending and impacting consumer confidence.
  • Potential for increased repossessions: For those struggling to meet higher repayments, the risk of falling into arrears and ultimately facing repossession could increase.

    The number of mortgage possession claims made by banks and landlords to repossess homes in England and Wales has reached its highest level in five years. Figures from the Ministry of Justice show that mortgage possession claims made by lenders in the county courts reached 5,343 in the three months to the end of June, up 34% from the previous year, the highest level since the first quarter of 2019.

  • Impact on the housing market: The surge in remortgaging activity could influence house prices, potentially leading to price stagnation or even falls in some areas.
  • Demand for financial advice: Homeowners will need expert guidance to navigate the remortgaging process and find the best deals available.

So, what can homeowners do to prepare?

  • Check your mortgage terms: Know when your fixed-rate deal expires and understand the implications of moving to the SVR.
  • Start planning early: Begin exploring remortgaging options several months before your current deal ends.
  • Shop around for the best rates: Compare deals from different lenders and consider using a mortgage broker to access a broader range of products.
  • Assess your affordability: Calculate how much you can realistically afford to repay each month, taking into account potential interest rate rises.
  • Seek financial advice: You can consult with a qualified financial advisor to discuss your options and develop a plan to manage your mortgage repayments.

The 2025 mortgage expiry peak presents a significant challenge for UK homeowners.

By understanding the scale of the issue and taking proactive steps, individuals can better prepare for the potential financial impact and navigate this period with greater confidence.

Staying informed and seeking professional advice will help reduce the risks and secure the most suitable mortgage arrangements.

Please feel free to contact us today if you’d like to review your mortgage.