Bank of England Warns 5.2 Million Borrowers Face Higher Mortgage Costs

What Has the Bank of England Said About Mortgage Costs?

The Bank of England's Financial Policy Committee has warned that the ongoing US–Israel–Iran conflict could push mortgage payments higher for an additional 1.3 million borrowers across the UK by the end of 2028.

Before the war began, the Bank expected around 3.9 million mortgage borrowers to face higher repayments before 2029. That figure has now jumped to 5.2 million, reflecting the economic fallout from surging oil prices and renewed inflation fears. For a detailed breakdown of how inflation is feeding into mortgage pricing, see our guide to Middle East conflict and UK inflation.

However, the Bank stopped short of forecasting a crisis. It stressed that average payment increases would be "modest in comparison to those experienced in recent years, as most mortgagors were already on higher rates." The UK banking system, it said, would remain capable of supporting households and businesses "even if economic and financial conditions were to be substantially worse than expected."

For expert analysis of how these changes affect your mortgage, visit The Mortgage Genie.

What Is Payment Shock and Who Is Most at Risk?

"Payment shock" refers to the jump borrowers face when their current fixed-rate deal ends and they move to a higher rate — either a new fix or their lender's standard variable rate (SVR).

The Bank of England's report makes clear that while the number of borrowers facing payment shock has increased significantly, the scale of individual increases is expected to be more manageable than the chaos that followed Liz Truss's 2022 minibudget.

That said, for borrowers on tight budgets — particularly first-time buyers who stretched to get on the ladder — even modest increases of £50–£100 per month can feel severe. Understanding mortgage affordability is critical, and speaking to a fee-free mortgage broker early can help you plan ahead.

If you're worried about how much your payments could rise, our mortgage salary calculator can help you work out what you can afford at different rate levels.

How Has the UK Mortgage Market Responded?

The UK mortgage market has taken a sharp hit since the conflict began. According to the Bank of England, the number of mortgage products available across the UK has plunged by around 1,500, although this pullback has been less severe than the product cull that followed the Truss minibudget.

Major lenders have been repricing at speed. Barclays increased rates by as much as 40 basis points on a range of its existing-customer residential mortgages, while scores of other lenders have withdrawn products with just hours' notice. Sub-4% mortgage deals have all but disappeared from the market.

Nationwide, Virgin Money and NatWest have all raised fixed rates, while NatWest has also repriced remortgage products. Industry expectations of lower rates by end of year have been tempered — a recent industry poll showed 38% of UK mortgage professionals now expect the Bank of England to hike rates twice this year.

As The Mortgage Genie has highlighted, acting quickly to secure a rate is more important than ever in this environment. Compare today's rates on our best rates page.

What Does This Mean for the UK Housing Market?

Homebuilder sentiment is also weakening. Construction giant Berkeley Group announced it was pausing new land acquisitions and slowing investment because of the weaker housing market outlook, sending its shares to their lowest level in a decade.

For buyers, this creates a mixed picture. While house prices hit record highs earlier in 2026, the combination of rising mortgage rates and builder caution could slow price growth — potentially opening windows for first-time buyers willing to act decisively. Our guide to the best areas for first-time buyers can help you identify where value remains.

Meanwhile, remortgage pressure is building early. Brokers report that borrowers whose fixed rates don't end until late 2026 are already reaching out to lock in deals — a sign of how jittery the market has become. If you're in this position, our remortgage service can help you explore your options early.

The oil crisis is set to intensify in April, meaning further pricing pressure may be coming. For a full timeline of how rates have moved historically, see our UK mortgage rate history.

What Should You Do Next?

If you're buying, moving, or your current mortgage deal ends in the next six months, here's what to consider:

1. Lock in a rate now — Most mortgage offers are valid for 3–6 months, so securing today's pricing protects you from further increases. Learn more in our application process guide
2. Don't wait for the "perfect" rate — In volatile markets, the best deal is the one you can secure today. You can always remortgage later if rates improve
3. Speak to a fee-free broker — At The Mortgage Genie, we search the whole market at no cost to you
4. Review your affordability — Use our affordability guide to understand how rate changes affect what you can borrow
5. Consider protection — With uncertainty rising, income protection and life insurance become even more important. Read our critical illness cover guide too
6. Understand your deposit options — Our deposit guide and LTV guide explain how your deposit affects what rates you'll be offered

At Amazon Mortgages, we offer 100% fee-free advice with access to 90+ lenders. Get in touch today for a free, no-obligation consultation. You can also get a personalised quote in minutes.