Two million people are at risk of falling behind on their mortgage payments if the Bank of England pushes interest rates up later this month, as is widely expected.

Of these, 347,000 borrowers would be at critical risk as even prior to this hike, according to figures from Oxford Economics and analysed by Hargreaves Lansdown, they are spending more than they have coming in each month – and don’t have enough emergency savings to protect them.

Experts warned that average monthly mortgage repayments, which hit more than £1,000 a month for the first time in February, will experience another jump if rates go up.

The Bank of England’s Monetary Policy Committee pushed rates up to 4 per cent in February and is expected to put them up a further 0.5 per cent at its next meeting on March 23.

Sarah Coles, head of personal finance at Hargreaves Lansdown, said any interest rate rise was bad news for those with variable rate mortgages.

“For anyone on a variable rate mortgage, a rise of any kind will be unwelcome – especially considering how their mortgage costs will have been getting harder to manage ever since the Bank of England started hiking rates well over a year ago.”

She added: “If you have a £200,000 tracker mortgage on a 25-year term at 4 per cent and it increased to 4.25 per cent, your payments would rise from £1,056 to £1,083. If it increased to 4.5 per cent, your payments would be £1,112. A £56-a-month rise on its own would be bad enough, but when it’s on top of so many others, there’s a real risk it could push people into financial difficulty.”

The labour market tightening alongside a hawkish Federal Reserve putting US interest rates up has increased expectations that the Bank will move to clamp down on inflation by increasing the cost of borrowing as employers may have to pay higher wages to attract and retain workers.

Firms would then pass on these costs with higher prices for customers and consumers, which would risk embedding inflation in the economy.

Benjamin Jones, head of macro research at Invesco, said that with the Consumer Price Index still in double digits there was reason for the Bank of England to hike the rate by 0.5 per cent but he thought it was looking to be more cautious.

He said next week’s labour market data is key to watch ahead of the next meeting.

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Coles said that borrowers with fixed rate mortgages would avoid the pain until it came to remortgaging.

“If you have a fixed-rate mortgage, your current rate wouldn’t change – until it’s time to remortgage. Then the cost of your new mortgage will depend on what’s happened to rates in the interim.”

She said more people have been turning to tracker mortgages, which follow the base rate, when their fixed deals come to an end while they wait for rates to fall again.

However, according to Jones, rate hikes would not have much of an immediate effect on most consumers’ finances as while around a quarter of mortgage holders are currently on standard variable mortgage rates, which would see monthly payments go up with a hike, most of them had already seen a big increase.

He said the increase would not influence the fixes that mortgage holders can now achieve as base rates, which have less influence on the fixed rates that households can achieve, have been falling since November.

Jones said: “The average rate on a two-year fixed rate mortgage is now 4.8 per cent down from 6 per cent in November. That’s still lower than pre- financial crisis figures and mortgage debt as a proportion of GDP is lower than it was at the start of the financial crisis.

“Still consumers have already been engaging in precautionary saving and a rate hike would not lead consumers to change that behaviour. There will remain fears that mortgage costs will be much higher when people roll off their existing fixed rates.”

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