Mortgage holders expect their monthly payments to jump by an average of almost £620 over the next two years due to rising interest rates, research by The Mortgage Lender shows.  

The specialist lender’s poll finds that 80% of homeowners reported being “concerned” about the effect of rising rates, with 37% being “extremely concerned” and 43% being “somewhat concerned”.  

This fear is felt most deeply among younger homeowners, with 88% of 25–34-year-olds worried about rising rates.  

The study adds: “With renting cheaper than a first-time buyer mortgage in some areas of the UK for the first time since 2010, it is not a surprise that the younger generation are concerned about the affordability challenges within the market.”  

Around 800,000 fixed-rate deals are due to end in the second half of this year, according to banking trade body UK Finance, with around 1.6 million deals due to end in 2024.  

Many of the homebuying market’s core two- and five-year deals were signed at sub-2% mortgage rates, but both of these terms now top 6%.  

Homeowners expect their mortgages to rise by £617.45 per month on average, according to The Mortgage Lender’s study.  

It says: “This is a stark contrast to the same question asked in November 2022, when the average expected increase was over £400 lower at £176.84.”  

The survey adds that 28% of homeowners are speaking to their mortgage lender, and a further 25% are speaking to their mortgage broker ahead of their renewal, to find the best possible deals.  

The BoE’s Monetary Policy Committee is expected to raise rates by 25 basis points from its current level of 5.25% after its meeting on Thursday.     

This would be the 15th rate rise in a row, taking it to the highest level for at least 15 years.      

However, many economists now forecast the base rate will remain at 5.5% until the end of the year, down from a predicted peak of 5.75% earlier this summer  

This comes amid the Bank’s battle against inflation, which fell to 6.8% in the year to July from 7.9% in June, but still remains almost three-and-a-half times higher than its 2% target.     

The Mortgage Lender chief commercial officer Steve Griffiths says: “With rates rising steadily over the last year, homeowners have been living with this new reality for a while now.   

“However, as many mortgages start coming up for renewal, the affordability challenges within the market are starting to hit more mortgage borrowers.”