Thousands of households across the UK will be £500 worse off every month from now until the end of 2027 due to soaring mortgage costs.

The Bank of England has warned that mortgage repayments could soar for around 4.4 million households over the next three years.

This includes £500 per month hikes for the mortgages of around 420,000 households by 2027, according to the Bank’s Financial Policy Committee (FPC).

It is expected that around 31% of all mortgages - or 2.7 million people - are set to refinance onto a rate of more than 3% for the first time before the final quarter of 2027.

Meanwhile between one and 1.5 million people will see a second increase to their mortgage repayment rates after having already fixed onto a higher price when interest rates started going up in the second half of 2021.

The Bank’s latest Financial Stability Report shows that most households have already had an increase in their mortgage costs, but around 37% haven’t yet fixed to a new rate since they started rising three years ago.

A typical household coming off a fixed-rate mortgage in the next two years is expected to face a jump of at least £146 per month, according to the report, which is slightly down from the projected £180 forecast in June.

But while around half of mortgage holders face seeing payments go up over the next three years, 27% will see monthly payments drop before 2027 having already seen rates rise, and 23% will see no change at all.

The Bank of England has stressed that UK lenders are in a strong position to support households facing steep repayment costs, even if the economic outlook gets worse.

The typical interest rate paid on newly drawn mortgages dropped to 4.61% in October, which is the lowest since May 2023, but for those who fixed their mortgage before rates started to go up in 2021, the average rate right now is significantly higher than they’re currently paying.

Richard Lane, chief client officer at charity StepChange, said: “It’s important to note that with rates still high compared to a few years ago, many homeowners are struggling to keep on top of mortgage costs and cover all other financial commitments. What’s more, with inflation above the 2% target, there’s no guarantee rates will continue to fall as quickly.

“We’ve seen the amount of mortgage arrears creep up among our own clients this year and it’s a real concern that there could be many more people out there just on the edge of falling behind with payments. For anyone struggling with ongoing mortgage payments or worried about debt – don’t hesitate to reach out to your creditors and ask for help.

“Mortgage lenders have a regulatory responsibility to support borrowers who’re struggling and may be able to provide forbearance.”