One million more UK homeowners set to face higher mortgage bills

The Bank of England forecasts that one million more UK homeowners will face increased mortgage bills by the end of 2028 than previously anticipated. This upward revision, driven by the impact of the Iran war, means just over five million homeowners can expect their monthly repayments to rise.

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The impact of the Iran war means a million more homeowners face higher mortgage bills than the Bank of England had previously expected.

While the Bank's Financial Stability Report suggests the overall impact will be less severe than in recent years, the figures still represent a significant shift. A typical owner-occupier moving off a fixed rate in the next two years may see their monthly mortgage bill increase by approximately £45. This is considerably less than the typical £120 rise experienced by those who remortgaged between late 2022 and early 2024.

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Just over five million homeowners should expect their monthly mortgage repayments to increase by the end of 2028, according to Bank forecasts.

However, a substantial group of 750,000 homeowners currently benefiting from interest rates below 3% are set to roll off their deals this year. These individuals are projected to face an average monthly repayment increase of £170. The majority of mortgage customers, over 80%, are on fixed-rate deals, which shield them from immediate rate changes until their terms expire. The Bank also noted that over two million borrowers with two-year fixed deals expiring by the end of 2028 are now unlikely to see their repayments fall as previously forecast.

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A typical owner-occupier rolling off a fixed rate in the next two years is likely to face an increase of £45 on their monthly mortgage bill.