The Bank of England is set to announce its biggest interest rate hike in 33 years today - adding an average £1,100 a year to mortgage bills.
Financial markets are betting that the Monetary Policy Committee will vote to up its rate by 0.75 percentage points - from 2.25% to 3% - to try to cool inflation.
It would be the eighth consecutive jump in interest rates by the Bank and will represent the biggest increase since 1989.
It would also be the highest rates have been since 2008 and the onset of the global financial crisis.
Another hike will hit two million borrowers on variable rate mortgages, plus thousands of others who are coming off cheap fixed rate home loans and needing to get another.
The average mortgage borrower on a standard variable rate of 5.86% with a £200,000 loan over 25 years is currently paying £1,271.54 a month, according to industry experts Moneyfacts.
That would jump to £1,364.19 if the Bank of England’s base rate leapt to 3% and was passed on.
That would jump by £92.65 to £1,364.19 if the Bank of England’s base rate leapt to 3% and was passed on.
Over a year that equates to a leap of £1,111.80 - even before any other possible rate rises.
Lindsay McMenemie, head of advice at finance company Creditfix, said: “It’s no secret that the cost of living crisis is causing a huge financial headache for so many people and an increase in mortgage rates is just another additional cost for homeowners to consider alongside rising energy and food costs.
“Mortgage repayments are rightly the first consideration when assessing outgoings and, with the cost of borrowing continuing to increase across the board, the knock-on impact could be huge - particularly for those who are already struggling with other unsecured debts.”
Mortgage rates have also been driven up by money market instability after September’s bungled mini-Budget.
Moneyfacts’ data showed the average two-year fixed rate mortgage on offer now is 6.47%, down from a peak of 6.65% late last month, but much higher than the 4.74% before axed Chancellor Kwasi Kwarteng outlined his now widely trashed tax cutting plans.
Meanwhile, the number of mortgages available for first time buyers and others with smaller deposits has also fallen.
There are now 141 deals with a loan-to-value of 95%, meaning borrowers need to have 5% of the purchase price.
That is up from 132 a month ago, but versus 274 at the start of September.
