Between 2022 and 2024, the UK mortgage market underwent its sharpest rate reset in over a decade. As fixed-rate deals expired, households refinancing onto higher borrowing costs faced increased monthly payments, prompting concerns about price correction and forced selling.
Yet the adjustment has proved more orderly than many anticipated.
Figures from the Bank of England show that while mortgage approvals dipped during peak rate uncertainty, arrears have remained relatively contained by historical standards. Lenders tightened affordability assessments well before rates peaked, limiting the volume of high-risk lending entering the reset cycle.
The bulk of refinancing occurred gradually rather than simultaneously, reducing the risk of concentrated stress. In addition, wage growth over the period has partially offset higher borrowing costs for many households. Although disposable income has been pressured, employment levels have remained comparatively resilient.
Property values have edged lower in some high-value markets, but nationally the correction has been modest relative to the scale of interest rate increases. According to the Office for National Statistics, annual house price movements have stabilised following earlier volatility.
There are structural reasons for this resilience. Post-2008 regulatory reforms strengthened capital requirements and borrower stress testing, creating a mortgage book less exposed to sudden rate shocks. Fixed-rate products, often spanning five years or more, also slowed the transmission of monetary tightening compared with variable-rate environments of previous cycles.
As base rates begin to ease, refinancing pressures are expected to moderate further. The refinancing wave has acted as a recalibration mechanism rather than a destabilising force, resetting affordability parameters while preserving underlying housing demand.
Rather than marking a downturn, the Great Refinancing Cycle may come to be viewed as a period of consolidation, reinforcing lending discipline while allowing regional growth differentials to reassert themselves.
