Mortgage crisis looms as HALF A MILLION households could see monthly repayments rise by £510 this year

Any homeowners who move onto their current lender's standard variable rate could see their monthly payments jump by £510, representing a considerable financial burden for households across the country.

Homeowners moving onto their current lender's standard variable rate could see their monthly payments jump to £1,227, based on an average mortgage debt of £178,523.

The annual cost implications are stark, with homeowners potentially paying £15,319 per year compared to the £9,195 they were paying on their previous five-year fixed rate deals. The latest Bank of England figures show the average standard variable rate was 7.13 per cent at the end of March 2025.

This dramatic increase reflects the broader shift in the mortgage market, where rates have risen significantly since the low-rate environment of 2020 when these homeowners initially secured their deals.

However, Compare the Market notes there are potential savings to be made by homeowners who shop around for a new mortgage deal rather than accepting their lender's standard variable rate when their initial mortgage term ends.

Switching from the current average standard variable rate of 7.13 per cent to a new five-year fixed rate mortgage with an average rate of 4.33 per cent could result in up to £3,618 in savings per year.

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Similarly, switching from the current average standard variable rate to the average two-year fixed rate of 4.60 per cent could save homeowners up to £3,290 annually on their mortgage repayments.

These substantial savings demonstrate the financial benefit of actively seeking alternative mortgage products rather than automatically rolling onto the lender's standard rate.

Even with new fixed rates, homeowners still face higher monthly repayments than when they fixed in 2020. Mortgage rates have declined in recent months following the Bank of England's decision to cut the Base Rate on May 8, but this has not been sufficient to return to 2020 levels.

If homeowners move to a new five-year fix with an average interest rate, they could see monthly repayments increase by £209 compared to their original 2020 deals. On a new two-year fixed rate, payments could increase by £236 per month.

It should be noted that a household's costs will depend on the individual's personal finances and any additional product fees, as these vary by lender and product.

Any homeowners who are concerned about rising mortgage repayments should speak to a professional mortgage adviser.

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Depending on their circumstances, homeowners may be able to extend their mortgage term, make an early lump sum payment, or move to an interest-only mortgage to lower the cost of their monthly repayments.

Guy Anker, Mortgage Expert at Compare the Market, comments: "For any homeowners coming off a fixed rate mortgage this calendar year, it's worth shopping around online soon and seeing what other deals are available, as this could potentially save thousands in annual repayments compared to going onto an SVR. You can sometimes book in a new rate up to six months before it's due to start.

"While you can compare online, it's also a good idea for homeowners to speak to a professional mortgage adviser to be as informed and confident as possible in their financial decisions if they don't understand what can be a complex market."