More than five million households are projected to see their mortgage repayments increase by the end of 2028, according to the Bank of England’s (BoE) latest Financial Stability Report.

The Bank said rates on new mortgages have increased since its last report in December, with the average rate on a two-year fixed 75% loan-to-value (LTV) mortgage now at 4.92% — 72 basis points higher than in December.

The average rate on a two-year fixed 90% LTV mortgage has also increased to 5.32%, 75 basis points higher than in December. The BoE said this reflects increases in market rates following the Middle East conflict.

However, the Bank said the impact is expected to be smaller than the increases experienced over recent years. For the typical owner-occupier borrower coming off a fixed-rate mortgage in the next two years, monthly repayments are projected to rise by £45.

This compares with a median repayment increase of around £120 between the end of 2022 and the end of 2024.

Based on current market interest rate expectations, the BoE said most borrowers on two-year fixed-rate mortgages expiring by the end of 2028 are expected to remortgage close to their existing rate and see little change in repayments.

However the Bank also said that some households will still see significant increases, particularly those coming off fixed-rate mortgages taken out before interest rates began rising in 2022.

Nearly 750,000 households currently paying less than 3% are projected to come off fixed-rate deals in 2026, with average monthly repayments projected to increase by £170, the Bank said.