The Bank of England has warned on Wednesday that almost 5 million homeowners will see their mortgages soar by hundreds over the next three years.
The bank has warned that due to global financial markets there are heightened risks interest rates could soar.
The Bank’s Financial Policy Committee (FPC) found in a report that banks are more than able to support households and businesses should the economic situation worsens.
More than 5 million households moved to a fixed rate deal in 2021 when interest rates started to significantly rise.
The FPC warned in their latest Financial Stability Report a further 5 million homeowners are due to be hit with hight borrowing costs by the end of 2026.
The bank has warned that around half a million households will be hit with a monthly increase of over £500 by the end of next year.
Due to soaring interest rates and higher borrowing costs many are in arrears and the FPC warned that more households could fall behind on their payments over the next few years.
The latest Financial Stability Report found the banking system is strong enough with high levels of liquidity to “support households and businesses even if economic and financial conditions prove to be substantially worse than expected.”
They warned that China is experiencing a sharp downturn in the property market that could have a knock on effect with the economy.
The FPC warned that as a result interest rates could end up being even higher, adding, “the overall risk environment remains challenging, reflecting subdued market activity, further risks to the outlook for global growth and inflation, and increased geopolitical tensions.”