Borrowers face £5,000 spike in mortgage costs

Homeowners whose mortgages directly track the base rate face a total average annual bill hike of around £5,000, following 12 consecutive hikes in the Bank of England base rate.

The average monthly tracker rate mortgage payment will increase by £23.71 following yesterday's base rate hike, according to calculations from UK Finance.

Homeowners on a standard variable rate (SVR) mortgage meanwhile will pay around £15.14 more per month typically, assuming that the lender passes the full base rate rise on to the borrower.

Borrowers often end up on their lender's SVR when their initial mortgage deal comes to an end and SVRs are set by individual lenders.

Over the course of the series of rate hikes, which have taken the base rate from 0.1 per cent to 4.5 per cent, the average monthly tracker mortgage payment has increased by £417.36, according to UK Finance's calculations.

This adds up to around £5,008 more per year for homeowners on trackers.

The average SVR payment has jumped by a total of £266.48 per month, which adds up to around £3,198 more annually.

Around four-fifths (81 per cent) of outstanding mortgages are fixed-rate deals. Mortgage

borrowers in this group will not feel the immediate impact of base rate rises until their deal ends.

Rachel Springall, a finance expert at Moneyfactscompare.co.uk, said: 'Those aiming to lock into a fixed-rate mortgage for peace of mind will find average rates have come down slightly over the past month, but as rates average around 5 per cent, this may still be unaffordable for some.’