Around 1.4 million homeowners could lose a fifth of their disposable income if interest rates are hiked again, a respected think tank has warned.
The Bank of England is expected to raise the base rate - which influences interest rates lenders charge for mortgages, loans and other types of credit - again tomorrow in an effort to curb inflation.
It comes as new figures today show the rate of inflation remained unchanged at 8.7% in the 12 months to May - despite hopes it would fall to 8.4%.
The Institute for Fiscal Studies (IFS) said Brits would see their mortgage payments jump if the average two-year fixed rate mortgage stays as high as 6.01%.
Average mortgage holders will see their mortgage payments rise by £280 per month – equivalent to 8.3% of their disposable income, it found.
The biggest hike was for people in their 30s, whose payments will jump by £360 per month - 11% of their disposable income.
Around 1.4 million mortgage holders – half of whom are under 40 – will see their mortgage payments rise by at least 20% of their disposable income.
Londoners will be worst affected, with mortgage payments rising by around 12% of disposable income on average.
The figures for the South East, East and South West of England are all above 9%. People in Northern Ireland are the least affected on 5.3% of disposable income.
After this rise, around 60% of the 14 million with a mortgage - 8.5 million adults - will spend at least a fifth of their income on mortgage payments.
In March 2022, only 36% of those with a mortgage - 5.1 million adults - shelled out this proportion of their incomes on mortgage payments.
Tom Wernham, Research Economist at IFS and an author of the report, said: "Many families bought homes – often with sizable mortgages – when interest rates were very low.
"As people’s fixed term offers come to an end they are going to be exposed to much higher interest rates. For many, the increase in monthly repayments is going to come as a serious shock – on average it will be equivalent to seeing their disposable income fall by around 8.3%.
"And for 1.4 million mortgage holders – half of whom are under 40 – mortgage payments are set to rise by an eyewatering 20% of disposable income or more.
"Given the cost of living pressures people are already facing due to high food and energy price inflation, these significant increases in mortgage costs could not come at a worse time."
Liberal Democrat Treasury spokesperson Sarah Olney said: "These stark figures show struggling homeowners are facing savage cuts to their incomes as mortgage rates go through the roof.
“The blame for this lies squarely with this Conservative government and their chaotic mismanagement of the economy. Jeremy Hunt has totally failed to get inflation under control and millions of families are paying the price through a crippling Conservative mortgage penalty.
“It is shocking that the government is still refusing to help struggling households despite being responsible for this cost of living catastrophe.”
Chancellor Jeremy Hunt said the Government would "stick to its guns" and urged patience for the Bank of England rate rises to curb inflation.
He said: "Today's figures strengthen the case for the Government to stick to its guns.
"No matter what the pressure from left, right or centre, we won't be pushed off course.
"Because if we are going to help families, if we are going to relieve the pressure on people with mortgages, on businesses, we need to squeeze every last drop of high inflation out of the economy."
He added: "If you look at what's happening in other countries, you can see that rises in interest rates do bring down inflation over time.
"That will happen here but we need to be patient, we need to stick to the course and then we'll get to the other side."
