The Bank of England's Monetary Policy Committee has held the base rate steady at 3.75%, defying earlier market predictions of a summer rate cut. The decision was driven by persistent inflation at 2.8% — above the 2% target — and geopolitical tensions that have introduced fresh uncertainty into the UK economic outlook.
For the millions of UK homeowners who were hoping for relief on their mortgage costs, the decision is a significant setback. More critically, it extends the period of elevated rates for the estimated five million homeowners who will see their fixed-rate deals expire by 2028.
The Refinancing Cliff
The "refinancing cliff" refers to the wave of homeowners who took out fixed-rate mortgages during the ultra-low rate era of 2020 to 2022, when rates below 2% were commonplace. As these deals expire, borrowers are rolling onto new fixed rates that are significantly higher.
The average monthly payment increase for borrowers rolling off sub-3% fixed deals is currently £170 per month — a figure that represents a substantial and sudden increase in housing costs for affected households. For some borrowers with larger mortgages, the monthly increase can exceed £400.
Use our free Mortgage Repayment Calculator to model what your new monthly payment will be at different interest rates, so you can plan ahead before your current deal expires.
The Lender Price War
Despite the high base rate, there is a notable competitive dynamic emerging in the mortgage market. Major lenders including Nationwide and Barclays have begun trimming their fixed-rate products in an attempt to capture market share ahead of the anticipated refinancing wave.
This creates a window of opportunity for borrowers who are proactive. If your current fixed-rate deal expires within the next six months, you can typically lock in a new rate up to six months in advance. Locking in now, before any further rate volatility, may save you significantly compared to waiting until your current deal expires.
Fixed Rate vs Tracker: Which Is Right Now?
The decision between a fixed-rate and a tracker mortgage is more complex than usual in the current environment. A tracker mortgage would benefit immediately from any future base rate cuts, but it also exposes you to further increases if inflation proves stubborn.
A two-year fixed rate offers certainty but locks you in at current elevated rates. A five-year fixed rate provides longer-term security but means you will not benefit from rate cuts if they materialise within that period.
The right choice depends entirely on your personal circumstances, risk tolerance, and financial resilience. The most important step is to compare the full market — not just your existing lender's products — using a whole-of-market broker. Compare the best current deals on our Best UK Mortgage Deals comparison page.
Preparing Your Credit Score for Remortgaging
Your credit score directly affects the mortgage rate you are offered. The difference between an Excellent and a Good credit score can translate to a rate difference of 0.3% to 0.8% — which on a £200,000 mortgage over 25 years represents thousands of pounds in additional interest.
If your fixed-rate deal expires in the next 12 months, start preparing your credit file now. Check your statutory reports across all three agencies, dispute any errors, lower your credit utilisation ratio, and avoid any new credit applications in the three months before you apply.
For a comprehensive checklist, read our guide on How to Prepare Your Credit Score for a Mortgage.