Homeowners may get £930 hit

A 1% rise in interest rates would add around £10 billion to the UK’s mortgage bill, according to analysis from property adviser Savills.

The increase would equate to adding £930 a year to the cost of servicing the average mortgage.

Borrowers on variable rate deals influenced by movements in the Bank of England base rate would be the first to feel the pain, putting the annual mortgage bill up by £4.3bn immediately, Savills said.

The six in 10 (59%) of borrowers on fixed-rate deals would feel the impact later, when their existing mortgage deals come to an end.

Of the total increase, Savills calculates that buy-tolet landlords would pay an additional £2.4bn, with other home owners paying £7.8bn more.

“This would bring an end to the historically low mortgage costs that have boosted housing affordability and limit the buying power of those needing a mortgage,” said Lucian Cook, head of residential research at Savills.

Earlier this month, Bank of England boss Mark Carney braced borrowers for further and faster interest rate hikes, although he also stressed rises would be limited and gradual.

With the possibility of further base rate rises on the horizon, home owners looking to lock into a long-term deal to get some certainty over their repayments may also find the rates on offer have edged up.