Around half UK mortgage borrowers face higher rates over the next three years, the Bank of England has warned. 

The latest BoE financial stability report – released twice a year – shows 4.4m homes set to refinance at higher rates in 2025 to 2027.

“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” the report says.

“And the share of households spending a high proportion of their income on mortgage payments is expected to remain low.”

The BoE forecasts some 2.7m homeowners will refinance onto a mortgage rate of over 3% for the first time before the end of 2027.

A typical owner-occupier coming off a fixed rate in the next two years will see monthly mortgage repayments rise by £146.

On the other side of the coin, some 23% of mortgage payers will see no change and around 27% of borrowers will benefit from lower rates, based on current market pricing.

The Bank stressed that UK lenders remain in a strong position to support households and businesses, even if the economic risk environment worsens.

Geopolitical risks remain high with Russia’s war in Ukraine and the conflict in the Middle East causing concern.

Although Donald Trump was not mentioned by name the Bank noted that following recent elections, “a range of macroeconomic and financial policies may change under newly-elected governments” leading to international “fragmentation.”

This fragmentation “poses risks to UK financial stability”, the Bank said.

“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.