A million more homeowners face higher mortgage bills by 2028

What the Bank of England actually said

The Bank of England publishes its Financial Stability Report twice a year to flag risks building in the financial system, and this time the mortgage section carried the headline. The Bank now expects just over five million owner-occupiers to be paying more each month by the end of 2028, up from the nearly four million it forecast in December. That works out at roughly a million more households caught by higher payments than it had pencilled in six months ago.

The cause is not a fresh rise in the base rate, which has sat at 3.75% since December. It is the delayed effect of an energy-price shock earlier in the year that pushed up the market rates lenders use to price fixed deals. Those higher rates now feed through to anyone whose fixed term ends over the next couple of years.

It helps to separate two things the headline runs together. One is how many people will pay more, which is the big, attention-grabbing number. The other is how much more they will actually pay, which turns out to be a good deal smaller than in recent years.

The typical rise is smaller than the headline suggests

For a typical owner-occupier coming off a fix in the next two years, the Bank expects payments to rise by around £45 a month. That sits well below the £120 a month faced by people who remortgaged between the end of 2022 and the end of 2024, when rates were climbing far more steeply. Market rates have come a long way down since then, which is why the step up is now gentler.

Timing is on most people’s side as well. More than eight in ten mortgage customers are on a fixed rate, so nothing changes for them until the deal ends. The higher payment arrives at renewal rather than overnight, which leaves room to plan for it. The Bank expects more than two million borrowers whose two-year fixes end by 2028 to remortgage close to the rate they are already on.

The wider readout is steady. The slice of a typical household’s after-tax income going on the mortgage held at about 7.5% at the end of 2025, and the Bank expects it to rise only to a little above 8% by 2028 even if energy costs stay high. Mortgages in arrears are running near 0.9%, close to their long-run average, and the Bank’s Financial Policy Committee said it saw limited signs of pressure building.

Who really needs to act: borrowers still on sub-3% deals

One group stands out in the report. Around 750,000 households are still paying less than 3% and will come off those deals during 2026. For them the jump is bigger, averaging about £170 a month, because they are moving from the very low rates of a few years ago straight to today’s pricing in one go.

If you are in that position, this is a year to plan your remortgage rather than let the deal lapse. The gap between a sub-3% fix and a current deal is where the payment shock sits, so it is worth knowing your number well before your term ends. You can put your own figures into our repayment calculator to see what a new rate would mean each month.

Why fixed rates jumped this spring

The trigger was energy. Disruption to the Strait of Hormuz, the shipping lane that carries roughly a fifth of the world’s oil and gas, pushed energy prices and inflation expectations higher earlier in the year. Fixed mortgage rates are priced off where markets think interest rates are heading, not directly off the Bank’s base rate, so they rose even though the base rate did not move.

The spike was sharp but has partly unwound. The average two-year fixed rate climbed from about 4.83% in early March to roughly 5.9% at its April peak, then eased back to around 5.5% by early July as the energy shock faded. Rates like these move daily, so treat any single figure as a snapshot rather than a fixed point.

The base rate itself has held at 3.75% since December, most recently on 18 June, and the next decision comes on 30 July. Markets are no longer betting on a steady run of cuts, so sitting tight in the hope that rates fall sharply is not something to rely on. Our rate outlook covers where the Bank may head next.

How to prepare, and where a broker helps

The sensible response to a jumpy market is to prepare early, not to panic. Most lenders let you reserve a new deal three to six months before your current one ends. That means you can lock a rate now and still move to a cheaper one if the market drops before it starts, so there is little downside to reviewing ahead of time.

It also pays to compare routes. When a deal ends, staying put with your current lender through a product transfer is quick and skips a fresh affordability check, but it only ever shows you one lender’s price. In the first three months of 2026, 84% of people refinancing did exactly that and took a product transfer, according to UK Finance. It is convenient, though not always the cheapest option once the rest of the market is in view.