Nearly half a million fixed rate mortgages set to expire by end of 2025 – Lindsay

These ‘Covid-era’ mortgages were taken out when the Bank of England base rate sat at record lows and average five-year fixed rates hovered between 2.25% and 2.74%.

The landscape today looks very different. According to UK Finance, borrowers on fixed rate mortgages due to end this year face going on to rates that are more than double what they secured during the pandemic. The average five-year fixed now stands at 4.55%, with two-year deals at 4.52%. For many, the jump in repayments will come as quite a shock.

Waiting for rates to fall

Advisers are increasingly finding clients who want to sit tight, waiting in the hope that rates will edge down further before the year is out. UK Finance has noted that some borrowers are even choosing to stay on their lender’s standard variable rate (SVR) temporarily in the hope of securing a better deal later in the year.

This creates a balancing act for advisers. While patience may pay off if rates fall again, the risks of remaining on an SVR – which can often be upwards of 7% – can outweigh any potential short-term savings. The adviser’s role is to model different scenarios, stress test affordability, and help clients decide whether waiting really works in their favour.

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Two years versus five years

The narrowing gap between two-year and five-year fixes also calls for nuanced advice. For example, on a £300,000 loan over 20 years, the difference between a two-year fix at 3.88% (£1,799 per month) and a five-year fix at 3.93% (£1,806 per month) is just £7. With such small margins, product choice increasingly hinges on client priorities: certainty and stability versus flexibility and the possibility of refinancing into a lower rate sooner.

Managing client expectations

For many borrowers, the transition from a 2.25% rate to today’s rate reality will be a difficult adjustment. Advisers can help this by starting conversations early. Lenders typically allow remortgage applications up to six months before expiry, giving clients more time to digest higher monthly payments and explore their options. This also means reinforcing the importance of total borrowing costs. Arrangement fees, early repayment charges (ERCs), and flexibility features should all form part of the discussion, not just headline rates.

Credit health is another important area where advisers can make a tangible difference. Encouraging clients to check and tidy up their credit reports well ahead of time, addressing any outstanding issues and avoiding unnecessary applications can expand the range of products available. For those who took furlough or payment holidays during Covid, advisers can explain how lenders are now assessing those histories and help position applications in the best light.

Looking ahead

The expiry of Covid-era mortgages is the largest shift the market has seen in years. While most clients will see payments rise, advisers can ease the transition by providing early, tailored guidance and help borrowers focus on the product that best aligns with their financial situation and future plans. With rumoured rate cuts expected later in 2025 and lenders showing more signs of innovation, we may have some positive news by the end of the year.

For advisers, the challenge is clear – but so is the opportunity. By offering proactive, personalised support, brokers can ensure clients are protected from costly missteps and be well positioned to benefit from whatever direction the market takes next.