Mortgage repayment warning for millions in Britain

The Bank of England warned that around 4.4 million households could see their mortgage repayments rise over the next three years.

The Bank's Financial Policy Committee (FPC) said this will include a £500 per month increase on the mortgages of around 420,000 households.

Meanwhile, between one million and 1.5 million people will see a second rate hike, having already locked in a higher price since rates started rising in the second half of 2021.

About 31% of all mortgages, or 2.7 million people, are expected to be refinanced for the first time at a rate above 3% before the last quarter of 2027.

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An average household paying off a fixed rate mortgage over the next two years will face an increase of around £146 per month, according to the report – down from the last projection of £180 in June.

But the central bank stressed that UK lenders are still in a strong position to support households and businesses even as economic conditions deteriorate.

For about 27% of mortgage holders, or 2.4 million people, monthly payments are expected to fall before the end of 2027, after interest rates had already risen.

The central bank also said the overall risk environment for the economy and financial sector has risen over the past six months after a slew of new governments were elected around the world.

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The Bank said risks to the financial system from wars, trade tensions and cyber attacks are increasing, adding that growing geopolitical tensions pose a “significant” risk to banks and broader financial stability.

Officials wrote: “Following elections in many countries, a range of macroeconomic and financial policies may change under newly elected governments.”

A survey of financial companies such as banks and asset managers found that “the share of those citing geopolitical risks reached the highest level,” as shown in the poll.

This comes amid an escalation of Russia's war in Ukraine in recent weeks, the ongoing war in the Middle East and the possible deterioration of US-China relations.

Newly elected US President Donald Trump also recently pledged to impose higher-than-expected tariffs on goods from Canada, Mexico and China, raising fears of trade wars worldwide.

The Bank's report on Friday did not mention Mr Trump but noted the “potential for greater global fragmentation” of trade as part of the wider range of geopolitical issues.

It said trade fragmentation also “poses risks to financial stability in Britain”, while it could also make it “more difficult to achieve an orderly transition to net-zero greenhouse gas emissions”.