NEARLY a millon households in the UK can expect their mortgage costs to jump by £500 a month the Bank of England has warned. 

The stark forecast in the half-yearly Financial Stability Report found that higher interest rates were filtering through to homeowners who are coming off fixed-rate mortgage deals, typically lasting two or five years.

The Bank said the average household will see their monthly interest payments go up by about £220 if they remortgage during the second half of this year. 

However, nearly a million people could see repayments soar by more than £500 a month by the end of 2026.

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Around 200,000 homeowners who are facing a monthly mortgage cost hike of £1,000 or more.

Some four million fixed-rate mortgage holders are still set to face a hike in borrowing costs between now and the end of 2026.

Around 4.5 million already have, since rates started to rise in late 2021.

The Bank’s warning dominated Wednesday’s Prime Minister’s Questions, with both Labour and the SNP pushing the Tories.

With Rishi Sunak in Latvia for the Nato summit, it was left to his deputy, Oliver Dowden, to answer on behalf of the Government. 

Labour’s deputy leader Angela Rayner pointed out that it was the first time a Prime Minister had missed two PMQs in a row since John Major in 1996. 

She said at that session, John Prescott had asked Michael Hesseltine why it was “that in Tory Britain, tens of thousands of families are facing repossession negative equity and homeless.” 

“Can he tell us, 27 years later, why I am having to ask the same question?” she asked.

Mr Dowden told his opposite number that his parents would not have been able to buy their own home “if it were not Margaret Thatcher and the reforms introduced by her government, and this Government is building on those with record housebuilding.”

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The SNP’s Mhairi Black criticised Prime Minister Rishi Sunak for saying people “need to hold their nerve” and Chancellor Jeremy Hunt for telling mortgage holders they should “just shop around”.

The SNP deputy Westminster leader told the Commons: “Last month, the Deputy Prime Minister dismissed warnings from these benches that mortgage rates were nearly back to where they were after the disastrous mini-budget.

“This week, mortgage rates have surpassed those levels. How high do they need to go until he and his Government take it seriously?

Mr Dowden replied: “She knows, people around the world know, that the driver of higher mortgage rates is higher inflation, and higher inflation is caused by Russia’s invasion of Ukraine and the post-Covid supply chains.

“But what we have to do is make sure we halve inflation. It’s only by getting inflation under control that we will be able to get mortgage rates down, and that requires discipline: discipline on spending, discipline on public sector pay and discipline on energy supply.

“All of which is lacking from that party.”

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Ms Black said: “The Bank of England predicts that mortgage payments will rise by at least £500 for a million households. The Prime Minister says that people need to hold their nerve. The Chancellor said just last night that mortgage holders should just shop around.

“Speaking of his own party, the member for South West Devon (Sir Gary Streeter) said ‘if the circus doesn’t stop by Christmas, it’s over’. Does the Deputy Prime Minister understand that people can’t afford to wait until Christmas and that they need help right now?”

Mr Dowden replied: “The fundamental thing we have to do is to halve inflation. That is an approach that the IMF, quote, ‘strongly endorses’ because higher inflation drives higher mortgage rates.

“But that’s not all we are doing. With the mortgage charter signed off by 90% of mortgage providers, we are giving people help to extend their terms, to go interest-only and to reduce their monthly payments.

“Now that action is supported by Martin Lewis, a real money-saving expert, unlike the big spenders on those benches.”