As many as half of UK mortgage holders could see their payments increase over the next three years, according to the Bank of England.
In its latest Financial Stability Report, the Bank estimates that around 4.4 million mortgages will see an increase in payments by 2027, with about 420,000 seeing hikes of around £500-per-month.
However, the Bank also stats that payments are set to fall for about a quarter of borrowers, with households better equipped to cope with mortgage repayments than predicted earlier in 2024.
Global risks to the economy continue to rise, says the Bank, with trade tension, wars, cyber attacks and geopolitical tends posing “significant” risks to broader financial stability.
"While many UK households, including renters, are still facing pressures from the increased cost of living and higher interest rates, the share of households who are behind in paying their mortgages is low by historical standards," it said.
"And the share of households spending a high proportion of their income on mortgage payments is expected to remain low."
Interest rates had been on the rise since 2021, and the Bank of England finally started to bring them down this year.
It says that a typical owner-occupier leaving a fixed rate deal in the next two years will have to pay around £146 extra each month.
While half of mortgage holders will see an increase in payments by 2027, there will be no change for 23% and no change at all for 27% of mortgage owners.
On a wider scale, the Bank of England said, "uncertainty around, and risks to, the global economic outlook have increased".
Russa’s war in Ukraine and the conflict in the Middle East mean geopolitical risks remain high, whilst following recent elections, "a range of macroeconomic and financial policies may change under newly-elected governments".
US-President-elect Donald Trump’s plans to put import tariffs on goods from Canada, Mexico and China were not mentioned specifically, but the Bank did highlight the "potential to increased global fragmentation" of trade that pose “risks to UK financial stability."
"A reduction in the degree of international policy cooperation could hinder progress by authorities in improving the resilience of the financial system and its ability to absorb future shocks," it added.
