On Tuesday, the Bank’s latest Financial Stability Report showed that a little over five million households are projected to see increases by the end of 2028

More than five million British homeowners are facing higher mortgage bills when they renew after pressure linked to the Iran war, the Bank of England has warned.

It means around a million more homeowners are set to face higher payments compared with previous predictions.

In a previous report last December, the Bank had said 3.9 million, or around 43 per cent of mortgage owners, were set for increases when they next renew.

On Tuesday, the Bank’s latest Financial Stability Report showed that a little over five million households are projected to see increases by the end of 2028.

This would see the average homeowner with a mortgage rolling off a fixed rate in the next two years face a £45 increase in their monthly payments.

Data also projected that almost 750,000 households, which are paying less than 3 per cent interest, will roll off their fixed-rate mortgages in 2026 and face an average increase of £170 a month in their repayments.

The report showed that the average rate for a two-year fixed mortgage, with a 75 per cent loan-to-value, is 4.92 per cent.

It said this is 0.72 percentage points higher than it was at the time of the Bank’s previous financial stability report in December.

The bank said higher borrowing costs and energy prices could place additional pressure on household finances but stressed that this will still leave household debt levels below previous highs.

It stressed that UK households and corporate debt levels are still low compared to historical averages and are resilient to potential shocks.