Hundreds of thousands of homeowners have been warned they could pay an extra £2,900 a year more for their mortgage from next year if interest rates continue to rise.
The Resolution Foundation predicts the Bank of England base interest rate could peak at nearly 6% by next year - currently, the base interest rate is 4.5%.
According to research by the think tank, around 800,000 people are expected to remortgage next year so will be impacted by the high rates.
With the rises, the Resolution Foundation predicts the average two-year fixed rate deal will hit 6.25% later this year and will not drop below 4.5% until after 2027.
If the Bank of England continues down this path, the total annual mortgage repayments are on course to rise by £15.8billion by 2026.
Borrowers are already facing big increases to their mortgages after lenders hiked rates over the past fortnight.
The higher rate predictions have subsequently filtered through into the mortgage market and a number of lenders have withdrawn mortgage deals or replaced them with ones with higher rates.
The Bank of England is set to announce its next base rate on Thursday (June 22) - with experts expecting another rise.
Interest rates have risen 12 times since 2021 to try to slow price rises.
This morning, MoneyFacts.co.uk revealed that a typical two-year fixed rate mortgage had breached the 6% mark for the first time since the infamous "mini-Budget" last September.
The interest rates on mortgages soared to 6.65% after the Mini-Budget before calming slightly, however, rates have climbed since.
This morning, the average two-year fixed rate mortgage rate sat at 6.01%.
A typical five-year fixed rate is now at 5.67% compared with last year's peak of 6.51%.
Simon Pittaway, senior economist at the Resolution Foundation, said: “Market expectations that interest rates are going to rise even higher, and stay higher for longer, are having a major effect on the mortgage market, with deals being pulled and replaced with new higher-rate mortgages.
“This means the mortgage crunch is now on track to increase mortgage bills by £15.8billion, with those re-mortgaging next year set to see their costs rise by £2,900 on average.
“Of course, market expectations can be wrong, and rate rises may not turn out to be as bad as feared.
"But with three-fifths of Britain’s £15.7billion mortgage hike still to be passed on to households, rising repayments will deal an ongoing living standards blow to millions of households in the run-in to the General Election.”
Last week, Chancellor Jeremy Hunt said the Bank had "no alternative" but to lift rates in its attempt to tackle inflation.
This morning the Prime Minister also ruled out extra help for homeowners struggling to pay soaring mortgages costs,
Speaking on ITV’s Good Morning Britain, Rishi Sunak said the Government needed to “stick to the plan”, and that his top priority remains bringing inflation down.
UK Inflation is currently at 8.7% which is way above the Bank of England's target of 2%.
