The bank says mortgage costs can run into the millions.

Half of UK mortgage holders could see their repayments rise over the next three years, the Bank of England has said.

It estimates that around 4.4 million mortgage payments are expected to rise by 2027, including a £500-a-month increase for around 420,000 households.

However, around a quarter of borrowers are set to see repayments fall, and the bank said households were better equipped to cope with mortgage repayments than forecast earlier this year.

The bank also warned that global risks to the economy are rising, with wars, trade tensions, cyber attacks and geopolitical tensions posing “significant” risks to broader financial stability.

In its latest financial stability report, the bank said household finances remained generally resilient.

“While many UK households, including renters, are still under pressure from the rising cost of living and high interest rates, the proportion of households falling behind on their mortgage payments is low by historical standards, ” he said.

“And the share of households spending a large portion of their income on mortgage payments is expected to remain low.”

The Bank of England began raising interest rates in late 2021, and after a series of increases, rates began to fall earlier this year.

The bank predicts that about 2.7 million homeowners will refinance at mortgage rates above 3% for the first time before the end of 2027.

It says a typical owner occupier would see their monthly mortgage repayments increase by around £146 over the next two years at a fixed rate.

However, this is a lower amount than estimated in its last report in June, reflecting lower mortgage rates and the fact that more households are choosing to borrow for longer periods.

Also, while half of mortgage holders are set to see payments increase by 2027, 23% see no change and 27% see payments decrease.

The bank stressed that UK lenders remain in a strong position to support households and businesses, even if the economic risk environment worsens.

Looking at the global picture, the bank said “uncertainties are all around, and risks to the global economic outlook have increased”.

Geopolitical risks are high with Russia’s ongoing war in Ukraine and conflict in the Middle East.

The bank noted that following the recent elections, “a range of macroeconomic and fiscal policies may change under newly elected governments”.

He did not specifically mention U.S. President-elect Donald Trump’s plans to impose tariffs on goods from Canada, Mexico and China, but noted the “potential for increased global distribution” of trade.

The bank said the split “poses risks to the UK’s financial stability.”

“A reduction in the degree of international policy cooperation could hinder progress by authorities in improving the resilience of the financial system and its ability to absorb future shocks,” it added.

The bank also acknowledged that borrowing costs for the UK government – as measured by bond yields – had risen since last month’s budget.

However, he added that “markets have continued to function smoothly”.