The Bank of England has warned that nearly half of UK mortgage holders could face rising payments over the next three years, with approximately 4.4 million mortgages expected to see increases by 2027. Among these, around 420,000 households could experience monthly hikes of £500.
Despite this, about a quarter of borrowers are set to benefit from falling payments, and the Bank noted that households are better positioned to manage mortgage costs than previously anticipated.
In its latest Financial Stability Report, the Bank highlighted rising global economic risks, including wars, trade tensions, cyberattacks, and geopolitical instability, which pose “significant” threats to financial stability.
Household finances have remained generally resilient, with mortgage arrears and the share of income spent on repayments remaining low by historical standards, even amid the pressures of higher living costs and interest rates.
The Bank projects that 2.7 million homeowners will refinance to mortgage rates above 3% by 2027. For those exiting fixed-rate deals in the next two years, monthly repayments could rise by an average of £146—lower than earlier estimates due to declining mortgage rates and longer borrowing terms.
While 50% of mortgage holders are expected to see payment increases, 23% will see no change, and 27% could benefit from reductions. UK lenders remain well-positioned to support households and businesses, even amid worsening economic conditions.
Globally, the Bank flagged heightened uncertainty, citing ongoing conflicts in Ukraine and the Middle East, as well as rising geopolitical tensions. It also warned of potential financial risks from increased trade fragmentation and reduced international policy coordination, which could undermine financial system resilience.
The Bank acknowledged a rise in UK government borrowing costs since the recent Budget but emphasized that financial markets continue to operate smoothly.