More than 2.3 million UK households brace to remortgage on worse deals as rate rise looms

Mortgage deals ending in 2027

More than 2.3 million UK households will reach the end of their fixed-rate mortgage deals in 2027, according to UK Finance. They may face a sharp increase in payments when they remortgage.

The Bank of England is expected to start raising its rate this week. Higher rates could push mortgage costs and other household expenses up further.

Rate forecasts differ

Financial market expectations point to four quarter-point rate rises over the next 12 months. Money market pricing suggests the Bank could raise rates four times by next July.

Household budgets under strain

The Office for Budget Responsibility warned that disposable incomes, after inflation, would fall by 0.6% next year. In March, it had forecast a 0.6% rise instead; the OBR’s David Miles called the latest outlook “a pretty grim picture”.

Ofgem’s energy price cap is forecast to rise by more than £400 in January, according to EDF’s latest estimate. Higher energy and food bills could compound the pressure on household finances.

Inflation and wider pressures

Bank of England governor Andrew Bailey said the Monetary Policy Committee is monitoring whether rising prices are passing into higher wages. Such “second-round effects” can make inflation more persistent.

Historically high oil prices, affected by the closure of the strait of Hormuz, have contributed to rising inflation. The UK economy grew faster than expected in the first half of 2026, matching the G7’s strongest pace, with the Office for National Statistics citing AI-related sectors as one contributor.