This year marks a significant turning point in the UK mortgage market as many homeowners reach the end of their covid mortgage, where many fixed in at the low rates afforded by the Covid pandemic, choosing to go for the security of a five-year fixed.
Those borrowers were right to do so, but for the 469,000 homeowners who did this, their low deals are now coming to an end.
This transition presents both challenges and opportunities for mortgage brokers. To effectively navigate this period, brokers must combine market expertise with proactive client engagement and strategic planning to help homeowners deal with what is likely to be a significantly higher rate and increased monthly payments.
In 2020, the UK mortgage landscape was characterised by historically low interest rates and economic uncertainty due to the Covid-19 pandemic. The Bank of England base rate was at an all-time low, and the government introduced measures such as the Stamp Duty holiday to stimulate the housing market.
During this period, five-year fixed-rate mortgages were offered at average rates between 2.25% and 2.75%, providing homeowners with stability during uncertain times.
However, the market has evolved. As of October 2025, the average five-year fixed-rate mortgage stands at approximately 5.02%, a significant increase from the rates available in 2020. This shift underscores the changing dynamics of the mortgage market and the financial pressures facing homeowners as they approach the end of their fixed-rate terms.
UNDERSTANDING THE BORROWER PROFILE
Many of the homeowners affected by this transition have not engaged with the mortgage process since before the pandemic. Their financial circumstances may have changed due to factors such as wage growth, increased household costs, or the addition of dependants.
Additionally, some borrowers may have experienced periods of furlough or government support, which could impact their current financial profiles.
Affordability remains a critical concern. Despite a decrease in inflation and expectations of future rate cuts, lenders continue to apply stringent affordability assessments. Homeowners transitioning from sub-3% fixed rates may face significant increases in their monthly repayments, potentially amounting to several hundred pounds.
THE REMORTGAGE OPPORTUNITY
The maturation of these Covid-era mortgages represents one of the most substantial remortgage opportunities in recent years. However, this influx of borrowers seeking new deals has intensified competition among brokers, lenders, and digital platforms.
To capitalise on this opportunity, brokers must engage with clients well in advance. Early engagement allows potential barriers to be better managed, such as credit issues or documentation gaps, before they become obstacles.
Proactive communication also facilitates broader financial discussions. Clients may be considering protection reviews, home improvements, or even early downsizing options. By positioning the remortgage process within the context of a comprehensive financial plan, brokers can reinforce their value proposition and strengthen client relationships.
EVOLVING LENDER STRATEGIES
In response to the anticipated surge in remortgage activity, lenders are adapting their strategies. Many are offering fee-free switch options, cashback incentives, and more flexible fixed terms to attract borrowers. Brokers should stay informed about these developments to provide clients with the most suitable options.
It’s also important to note that many clients are in a stronger financial position than they were five years ago. Wage growth and improved credit profiles may make borrowers eligible for products that were previously inaccessible, presenting opportunities for brokers to offer enhanced solutions.
MANAGING CLIENT EXPECTATIONS
Clients transitioning from low-rate fixed deals may get a bit of a shock when they see the current market rates. Brokers can play a crucial role in managing these expectations by providing clear, contextualised information about the market and available options.
Advisers should discuss various strategies with clients, considering the following:
- Overpayments: Making additional payments to reduce the principal balance and decrease future interest costs.
- Offset products: Linking savings accounts to mortgages to reduce the interest payable.
- Two-year fixed: Opting for two-year deals to benefit from potential future rate reductions.
- Five-year fixed: Choosing five-year deals for payment stability if clients anticipate staying in their current properties.
It’s essential to consider each client’s unique circumstances, such as income stability, career plans, dependants, and future housing goals, to recommend the most appropriate course of action.
THE FUTURE
Looking ahead, the mortgage market is expected to remain dynamic. While the Bank of England base rate has held steady at 4% since mid-2024, forecasts suggest potential rate cuts in 2026. Lenders want to lend and we expect to see continued innovation coming through, with a focus on products that cater to the evolving needs of borrowers.
Brokers should also be aware of broader economic factors that may influence the housing market. For example, concerns about potential property tax increases in the upcoming budget have led to a slowdown in housing market activity, with average asking prices rising by only 0.3% in the four weeks to October 11, 2025, compared to the seasonal average of 1.1%.
The expiration of Covid-era mortgages in 2025 presents a pivotal moment for mortgage brokers. By engaging clients early, staying informed about market developments, and providing personalised advice, brokers can navigate this transition effectively.
This period offers an opportunity to demonstrate the value of professional mortgage advice and to build lasting client relationships in a changing financial landscape.
