750,000 UK households set to lose £170 a month warns Bank of England | Personal Finance | Finance

As many as 750,000 households are set to lose £170 a month as mortgage bills climb again, the Bank of England has warned today.

More than five million home owners in total face higher mortgage bills between now and 2028, the BoE said, with the average increase expected to be £45 a month, as the pressure from the Iran conflict hits households as their fixed deals end and they are forced to re-fix at a higher rate.

In a previous report last December, the Bank had said 3.9 million, or around 43% of mortgage owners, were set for increases when they next renew.

On Tuesday, the Bank’s fresh Financial Stability Report showed that “a little over five million households” are projected to see increases by the end of 2028.

This would see the average homeowner with a mortgage rolling off a fixed rate in the next two years face a £45 increase in their monthly payments.

Data also projected that almost 750,000 households, which are currently paying less than 3% interest, will fall off their fixed-rate mortgages in 2026 and face an average increase of £170 a month in their repayments.

The report showed that the average rate for a two-year fixed mortgage, with a 75% loan-to-value, is 4.92%.

It said this is 0.72 percentage points higher than it was at the time of the Bank’s previous financial stability report in December.

The bank said higher borrowing costs and energy prices “could place additional pressure on household finances” but stressed that this will still leave household debt levels below previous peaks.

It stressed that UK households and corporate debt levels are still low compared to historical averages and are resilient to potential shocks.

Joe Smithies, Head of Advice at PennyPlan, a leading debt solutions provider, said that the combination with soaring council tax bills is making life ‘unmanageable’ financially for many.

He said: “Mortgage rate increases have had a huge financial impact on many homeowners in recent years and combined with a 26% increase in council tax for many, it is hitting the purse strings hard.

“We’ve seen a significant increase in people coming to us with unaffordable debt over the last few years, with the rise in mortgage, and rent, costs playing a prominent role in making other areas of living unmanageable.

“As mortgage repayments rise we anticipate a significant spike. If you are one of the five million that could expect mortgage repayments to go up by the end of 2028, now would be a good time to try and reduce the cost of existing unsecured debts, consolidate multiple monthly repayments where appropriate and ensure your mortgage and wider borrowing remain suitable for your circumstances.”