Thousands of homeowners could see payments jump by £4,860 a year from tomorrow

Homeowners coming off fixed-rate mortgage deals in 2025 could be hit with a sharp rise in monthly repayments, rising from £814 to £1,219 if they move onto their lender’s average Standard Variable Rate (SVR), according to research from Tally Money. This jump would see the average borrower paying an additional £4,860 each year.

The warning comes despite a recent cut to the Bank of England’s base rate, which now sits at 4.25 per cent. However, most lenders’ SVRs remain significantly higher, averaging 7.58 per cent.

As a result, many homeowners risk moving onto rates that are nearly double what they were paying during their fixed term. Already, around 540,000 borrowers, about six per cent of all mortgage holders, are on their lender’s SVR, and that number is expected to rise sharply.

With 1.6 million fixed-rate mortgages due to end in 2025, an average of 4,384 borrowers each day will need to secure a new deal or risk being moved onto significantly higher rates.

Thousands of homeowners could see payments jump by £4,860 a year from tomorrow

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Borrowers who locked into five-year fixed deals in March 2020, when the average rate was just 2.74 per cent, are likely to face the biggest shock.

The research highlights the reality for thousands of households, many of whom will experience a steep increase in repayments almost overnight.

Today, the average two-year fixed mortgage stands at 5.18 per cent, while the average five-year fix is slightly lower at 5.10 per cent. But it’s the 7.58 per cent SVR that poses the greatest threat to household budgets.

Using the average UK house price in 2020 (£235,637) with a 75 per cent loan-to-value (LTV), monthly repayments on a typical fixed-rate mortgage were around £814.

If homeowners move onto today’s average two-year fixed deal at 5.18 per cent, that figure rises to £1,007 a month. On a five-year fix at 5.10 per cent, it’s £1,001, while those falling onto the average Standard Variable Rate of 7.58 per cent will face payments of £1,219.

TotallyMoney’s report also reveals wide variation in SVRs across major UK lenders

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TotallyMoney’s report also reveals wide variation in SVRs across major UK lenders.

Metro Bank currently charges the highest SVR at eight per cent, followed closely by Lloyds Banking Group and Leeds Building Society at 7.99 per cent. TSB offers 7.74 per cent, while Bank of Ireland is at 7.64 per cent.

Several major banks including NatWest, Virgin Money, and Yorkshire Building Society have SVRs of 7.49 per cent. Others, such as Co-op Bank (7.12 per cent), Coventry Building Society (7.09 per cent), and Nationwide (6.99 per cent), sit in the mid-range.

Santander offers a slightly lower rate at 6.75 per cent, with HSBC at 6.74 per cent and Barclays at 6.24 per cent. Skipton Building Society currently offers the lowest among the major lenders at 6.50 per cent.

Despite some variation, all SVRs remain well above the Bank of England’s base rate, creating significant financial pressure for households without a new fixed deal in place.

Alastair Douglas, CEO of TotallyMoney, said: “If you’re a homeowner, then open your banking app or dig through your statements to find out when your existing deal is ending. You can often do it up to six months in advance, helping you to avoid the dreaded standard variable rate.”

Douglas also advised checking one’s credit report to ensure everything is accurate and up to date. For those already struggling with payments, he recommended immediate action.

He continued: “Contact your provider as soon as possible. The Government has told lenders to support borrowers, and to offer them personalised solutions to help them manage their finances.

Acting early, he said, could help avoid missed payments, damage to your credit score, or in the worst cases, home repossession. With thousands facing payment shocks daily, being prepared could save homeowners thousands of pounds each year.