The Bank of England is widely expected to increase its base rate on Thursday, with many pundits predicting its biggest ever rise in 27 years of 0.5 percentage points.

That would take the official Bank Rate to 1.75%, up from just 0.1% at the start of December 2021.

So what will such a large rise mean for mortgage borrowers?

Big impact

For the average UK property costing £270,708, with a mortgage at 75% of the property’s value, a 0.5 percentage point hike means mortgage repayments will cost £196 per month more than in November last year, said TotallyMoney.

The credit app said that, even if the Bank raises the rate by just 0.25%, the same mortgage repayments will have risen by £144 per month since November 2021.

It added that 850,000 properties on tracker mortgages and 1.1 million on standard variable rates will see a hike within weeks.

Plus a third of borrowers with a fixed rate deal are heading for a payment shock when their current offer expires in the next two years. They will need to find a new deal at a higher rate, or face being placed on lender’s standard variable rate (SVR).

Alastair Douglas, CEO of TotallyMoney, said: “The latest interest rate hike will serve as yet another blow to the two million mortgage borrowers without a fixed-rate deal. Repayments for the average home are set to rise by £52, an increase of £196 per month since last autumn.

“What’s more, this isn’t an isolated problem. With everything ranging from phone bills to food feeding inflation, costs will continue to soar over the upcoming months, increasing pressure on household finances for millions.

“The one in three homeowners whose fixed-rate deal is soon coming to an end should start planning ahead. Not only is the SVR rising, but new deals are also getting more expensive. Either way, you’re likely to be paying more, so it’s worth looking at your options in advance.”

Andrew Hagger, personal finance expert at Moneycomms.co.uk, added: “The Monetary Policy Committee decision to hike rates for the sixth time since last December will make borrowers wince at the thought of yet higher monthly mortgage costs.

“Customers on a fixed rate will avoid immediate financial pain, but for many a triple digit increase is inevitable next time their mortgage deal comes up for renewal.”