What do rising interest rates mean for my mortgage?

When interest rates rise, the cost of borrowing can increase. For homeowners, that can mean higher mortgage repayments—particularly when your deal ends or your mortgage rate is linked to a benchmark.

Even if you’re not seeing changes immediately, it’s helpful to understand how different mortgage types react to rate rises and what practical options may be available when you’re planning a remortgage.

Planning a remortgage while rates are rising? This guide focuses on that decision. For a broader primer on how interest rates work, see our interest rates smart guide, or our rate-type deep dive on what a base rate increase means.

Why interest rates can rise

In the UK, the Bank of England sets the base interest rate to help manage inflation. When inflation is high, the Bank of England may raise the base rate.

For mortgage borrowers, the key point is that base rate movements can influence mortgage pricing, but the timing and impact depend on the type of mortgage you have.

Mortgage rates don’t move in lockstep with the base rate, but base rate changes often feed through to the rates lenders offer. That can mean:

• New mortgage deals may become more expensive to take out.
• Existing mortgages may become more expensive if they aren’t fixed.
• Costs at deal end may be higher if your next rate is based on less favourable market conditions.

How rising interest rates affect different mortgage types

Fixed-rate mortgages

With a fixed-rate mortgage, your interest rate (and therefore your monthly repayment amount) is set for a defined period. That usually means:

• Your repayments typically don’t change during the fixed term
• The impact is most likely to show up when the deal ends and you move onto a new rate (either a new fixed deal or another mortgage rate type)

So, even if your current payments are stable, rising interest rates can still affect what you’ll pay at remortgage time.

Tracker-rate mortgages

Tracker mortgages are designed to move in line with a specified rate (often the Bank of England base rate plus or minus a margin). As a result:

• Repayments can increase as the linked rate rises
• The change can be more immediate compared with fixed deals

If you’re on a tracker deal, it’s worth understanding exactly what your mortgage tracks and how frequently the rate is updated.

Variable-rate mortgages (including SVR)

Variable-rate mortgages can change when your lender adjusts its pricing. Depending on the product, this may be influenced by the lender’s standard variable rate (SVR), the wider market, or other internal factors.

In practice, variable-rate borrowers may see:

• Repayments rise when lenders increase their SVR or variable pricing
• Potential payment changes without a set end date, depending on lender decisions

What to expect when your deal ends

For many homeowners, the biggest “rate rise” moment comes at the end of a fixed term. When you remortgage, you may find that:

• New deals are priced at rates that may be higher than your current one
• Your monthly repayment could increase, depending on the size of your loan, the term remaining, and the deal you choose next

The exact outcome depends on factors such as your remaining balance, your remaining term, and the type of deal you choose next.

Why “small” rate changes can still matter

Mortgage interest rates are usually expressed as a percentage, so a change of a fraction of a percentage point can look minor. However, mortgages are large balances over long periods, so the effect can add up.

Even when monthly repayments rise by a modest amount, the total interest paid over the full term can increase.

What to consider when choosing a mortgage in a higher-rate environment

When rates are moving, the “best” mortgage is often the one that fits your circumstances and risk tolerance—not just the lowest headline rate.

1) How long you want payment certainty

Many borrowers choose a fixed rate to reduce uncertainty. The trade-off is that if rates fall later, you may not benefit immediately. If rates rise further, a fixed deal can help protect your repayments for the agreed period.

2) The size of the deposit and your loan-to-value (LTV)

Your LTV (the loan amount compared with the property value) can influence the pricing you’re offered. In general, borrowers with more equity may access more competitive options than those with a higher LTV.

3) Your mortgage term

A longer term can reduce monthly repayments, but it can increase the total interest you may pay. A shorter term can increase monthly outgoings, but may reduce the overall cost.

4) Repayment type and affordability

Whether you’re on a repayment or interest-only basis affects how the mortgage balance changes over time. In a higher-rate environment, stress-test your budget so you’re comfortable with repayments if rates are higher than expected.

5) Flexibility features

Some mortgages offer options such as overpayments (subject to product rules). If you expect to have spare cash at times, flexibility can help you manage the balance and potentially reduce interest over the long run.

Practical steps to manage potential repayment increases

1) Identify what type of mortgage you’re on

Before planning any change, it helps to be clear on:

• Whether your rate is fixed, tracker or variable
• When your current deal ends (or when the next pricing change could occur)
• Whether your mortgage has any features that affect repayments

2) Check for early repayment charges (ERCs)

If you’re considering switching before your current deal ends, early repayment charges may apply. These can affect whether a switch is cost-effective.

A useful approach is to compare:

• The potential savings from moving to a different rate
• Against any ERCs and the costs involved in arranging a new mortgage

3) Consider whether a different deal structure suits your situation

If you’re concerned about future rate rises, homeowners often review options such as:

• Switching to a fixed-rate deal to secure repayment stability for a period
• Choosing a deal that better matches your expected timeframe for staying in the property

The “best” choice depends on your priorities—such as budgeting certainty versus flexibility.

4) Review your affordability and repayment plan

Even where a mortgage rate change is possible, it’s important to look at your overall financial picture. Consider whether you have room in your budget for:

• Higher monthly repayments
• Changes in other household costs
• Potential future rate movements at remortgage time

If you’re unsure how different scenarios could affect your monthly outgoings, it can help to model repayment changes based on different rate outcomes.

5) Plan ahead rather than waiting for the last minute

Remortgaging decisions can take time, and rates and product availability can change. Planning around your deal end date can reduce pressure and help you decide with more information.