Editor's note: This brief was summarised by The Property AI Newsroom from a report by PropertyWire. Read the original article for full details.

Over Five Million UK Households Face Higher Mortgage Repayments by 2028

More than five million UK households are expected to face higher mortgage repayments when they refinance over the next two years, according to the Bank of England’s July 2026 Financial Stability Report. The Bank’s latest estimate marks an increase from its previous projection of nearly four million households published in December.

The Bank of England attributes the revision to higher mortgage rates following increased market interest rates linked to the conflict in the Middle East. The average rate on a two-year fixed 90% loan-to-value mortgage has risen to 5.32%, which is approximately 75 basis points higher than at the time of the December report.

Around 750,000 households due to refinance by the end of this year, after taking out mortgages before 2022, are expected to experience the largest increases in repayments. Many of these borrowers are coming to the end of fixed-rate mortgage deals that were secured when borrowing costs were below 3%.

The Bank notes that lenders are continuing to adjust mortgage pricing in response to changes in wholesale funding costs and market expectations for interest rates. This shift in borrowing costs could have implications for the wider property market, including both residential lettings and purchase activity.

Despite the increase in refinancing costs for many borrowers, the Bank of England stated that the UK financial system remains resilient overall. The Financial Stability Report also highlighted potential risks to global financial markets, including increased borrowing by hedge funds to invest in artificial intelligence-related stocks.

Regulatory Changes Proposed

The Bank of England outlined proposals to reduce some regulatory requirements for the UK’s largest lenders as part of a wider review of the financial system. Under these plans, systemically important banks would be allowed greater flexibility to use their capital buffers during periods of market stress before rebuilding them over time. The Bank is consulting on changes to capital rules that could allow major lenders to hold slightly lower levels of capital against their lending, aiming to increase their capacity to support households and businesses.

These regulatory adjustments are intended to balance financial stability with the need to support lending to the property sector and wider economy during periods of economic stress. The proposals form part of broader efforts to simplify post-financial crisis regulation while maintaining the resilience of the UK banking system.