According to its financial policy committee, up to 400,000 households might see “very large increases” of more than 50%.
The goal of raising interest rates to a nearly two-decade high of 5.25% is to stifle price increases that are driving up the cost of living issue.
The rate of increase in prices, or inflation, had reached a 40-year high, but it is currently at the bank’s objective of 2% due to higher borrowing costs and lower expenditure due to high interest rates.
The financial policy committee stated on Thursday in its financial stability report that more than a third of mortgage holders (35%) are still paying a mortgage rate of less than 3% despite the higher base interest rate established by the Bank.
This is because they agreed to a contract prior to the spikes in energy prices brought on by the conflict in Ukraine.
However, since mortgage rates began to rise in late 2021, the majority of mortgage holders have made adjustments to their payments.
According to the analysis, a typical household that pays off a fixed-rate mortgage before the end of 2026 will have to pay an extra £180 a month.
