According to the Bank of England, approximately 4.4 million mortgage borrowers are set to face elevated loan repayments within the next three years.

This group includes an estimated 1 million to 1.5 million homeowners who have already transitioned to a higher rate once and will be required to refinance again on potentially even more costly terms by the close of 2027.

For many, experiencing the impact of higher mortgage rates will be a new challenge. The Bank indicated that 37 percent of those with fixed-rate mortgages had not adjusted their deals since borrowing costs began to escalate in late 2021.

As a result, about 2.7 million homeowners, which constitutes 31 percent of all mortgage holders, will be moving to a deal with an interest rate exceeding 3 percent for the first time, according to the Bank’s findings. Furthermore, around 420,000 borrowers are projected to see an increase in their monthly payments exceeding £500.

On a more positive note, an additional 2.4 million mortgage holders who have recently switched to higher-cost deals may start experiencing some relief due to the interest rate cuts implemented by the Bank since the summer.

This assessment of the mortgage market was included in the Bank’s recent financial stability report, which indicated that British households and businesses were likely to remain resilient overall.

Nonetheless, regulators cautioned that broader risks to the financial system are intensifying.

In the semi-annual report, the Bank’s financial policy committee highlighted that “global risks stemming from geopolitical tensions, global fragmentation, and pressures related to sovereign debt levels are still significant.”

It further noted that “uncertainty surrounding and risks to the forecast have escalated. As the UK operates within an open economy with a substantial financial sector, these risks are especially pertinent to the stability of UK finances.”