Bank warns millions of homeowners face higher mortgage bills after Iran war</final

Just over five million homeowners are now expected to see monthly mortgage repayments rise by the end of 2028, about one million more than the Bank of England had previously anticipated. For a typical owner-occupier rolling off a fixed rate in the next two years, the increase is likely to be £45 a month, compared with a £120 monthly rise for borrowers who took out new deals between the end of 2022 and the end of 2024.

The Bank of England’s Financial Stability Report, published on 7 July 2026, links the pressure on household budgets to the conflict in the Middle East. The shock fed through to global energy prices and government bond yields, producing large and volatile moves that can ultimately influence borrowing costs. In its June 2026 Monetary Policy Summary, the Bank held Bank Rate at 3.75%, with two members of the Monetary Policy Committee voting for a rise to 4%.

More than eight in 10 mortgage customers are on fixed-rate deals. Those rates stay unchanged until the fix expires, usually after two or five years, so the impact arrives in waves as households refinance onto new deals. In July 2023, the Bank warned that around 4.5 million mortgage accounts had seen repayments rise since late 2021, and it expected higher rates to affect the vast majority of the remainder by the end of 2026.

Lower-income households, including renters, are likely to be more exposed to higher energy prices because they spend a larger share of income on essentials. Household finances are resilient overall and debt is low relative to historical averages.