One million more UK homeowners are now expected to face increased mortgage repayments by the end of 2028, a significant upward revision from previous forecasts, the Bank of England announced.

The revised projection, detailed in the Bank's Financial Stability Report, attributes this shift to the economic fallout from the Iran war, which has impacted global energy supplies and inflation.

Just over five million homeowners are now anticipated to experience higher monthly mortgage bills, compared to the four million projected in December. The Bank, however, noted that the overall financial impact on homeowners is not expected to be as severe as during recent periods of significant rate increases.

For homeowners rolling off a fixed-rate mortgage in the next two years, the typical monthly repayment increase is estimated at £45. This contrasts with the £120 rise experienced by those who secured new deals between late 2022 and the end of 2024.

A particular group facing substantial increases are approximately 750,000 homeowners currently paying less than 3% interest on their deals. These individuals, whose fixed terms are expiring this year, could see their monthly repayments rise by an average of £170.

More than 80% of mortgage customers in the UK are on fixed-rate deals, where interest rates remain constant until the agreement expires, typically after two or five years. The choice of a new deal then dictates future payment amounts.

Previously, the Bank had forecast that over two million borrowers with two-year fixed deals expiring by the end of 2028 would likely remortgage at rates close to their existing ones, resulting in minimal changes to their payments. However, due to the evolving economic conditions, these borrowers are now unlikely to see any reduction in their repayments in the coming years.

The Iran war's disruption to the Strait of Hormuz shipping lane, a critical artery for global energy, has led to increased oil and gas prices. This surge in energy costs has, in turn, contributed to higher inflation, influencing the Bank of England's economic outlook and its revised mortgage forecasts.