The latest Bank of England base rate hike will add nearly £50 per month to the average monthly tracker mortgage payment, according to a trade association.

The Bank of England base rate increased from 3.5% to 4% on Thursday, which will have an immediate impact on homeowners whose mortgages directly track it.

Borrowers on fixed-rate mortgages will not feel the immediate impact, although 1.8 million customers are due to see their fixed-rate deals end at some point this year.

According to figures from UK Finance, the average tracker mortgage payment will increase by £48.99 per month.

Anyone who is concerned about their finances should contact their lender as soon as possible to discuss the options available to help

The average standard variable rate (SVR) mortgage will increase by £30.81 per month. SVRs are set by individual lenders and borrowers end up on an SVR once their initial mortgage deal ends.

A string of base rate hikes have taken place over the past year.

Average tracker mortgages now cost £382.16 per month – or nearly £4,586 per year – more than in December 2021, and average SVRs now cost £240.32 per month – or nearly £2,884 per year – more typically, according to UK Finance’s figures.

Around four fifths (78%) of customers are on fixed-rate mortgages, UK Finance said.

A UK Finance spokesperson said: “Lenders stand ready to help customers who might be struggling with their mortgage payments, with a range of tailored support available.

“Anyone who is concerned about their finances should contact their lender as soon as possible to discuss the options available to help.”

Higher mortgage payments also risks higher rents as landlords pass rising costs on to some tenants

Mortgage rates jumped last autumn amid market turmoil following the mini-budget.

Tim Bannister, a property expert at Rightmove, said: “For those considering taking out a fixed mortgage deal soon, the good news is that this increase was widely expected by the financial markets and will have likely been factored into their plans.

“This means that we may see fixed-rate mortgage deals continue to edge downwards in the first half of this year, as some stability and calm continues to return to the markets.

“We’re still seeing buyer demand higher than the last ‘normal’ housing market of 2019, indicating that people have the confidence to get on with their moves and if fixed deals do head further downwards this may encourage people further. We may see further increases in the base rate later this year but it’s difficult to predict how it will impact mortgage rates.”

Frances McDonald, research analyst at Savills, said: “Savills anticipates (house) prices across the UK will fall by 10% by the end of this year with the expectation that interest rates gradually come down from mid-2024 onwards, when values will begin to recover.

“UK house prices are then forecast to rise by 17% between 2024 and 2027…

“Throughout this year the market will be dominated by needs-based buyers and those who are less reliant on mortgage debt.

“As such we expect the prime housing markets to outperform, seeing smaller price falls and a stronger recovery than their mainstream counterparts.”

Joanna Elson, chief executive of the Money Advice Trust, the charity that runs National Debtline and Business Debtline, said: “Higher mortgage payments also risks higher rents as landlords pass rising costs on to some tenants.”

Rachel Springall, a finance expert at Moneyfacts.co.uk, said: “Borrowers coming off their fixed-rate deal will be disappointed to see this latest rise to the Bank of England base rate, particularly if they plan to sit on their standard variable revert rate over the shorter term in hopes that fixed rates will come down before they refinance.

“The mortgage market is slowly recovering from the volatility of interest rate uncertainty towards the tail end of 2022, but the markets are expecting both rises and falls to base rate this year.

“Lenders tend to pass base rate rises onto SVRs within a few months.”

The influence of the Bank of England base rate rises, along with rate competition, has made a positive impact on variable-rate savings accounts, which include cash Isas

The latest base rate increase may provide some further hope for savers.

Ms Springall said: “Interest rates on variable savings accounts are continuing to rise, as several providers have improved their offers since the start of 2023.

“The influence of the Bank of England base rate rises, along with rate competition, has made a positive impact on variable-rate savings accounts, which include cash Isas.

“Challenger banks and building societies continue to take the most prominent positions in the top rate tables, so savers who fail to review their existing account to the latest top rates may miss out. Loyalty does not always pay.”

Becky O’Connor, director of public affairs at PensionBee said: “Higher interest rates can also boost annuity rates, which have been rising over recent months.

“These secure retirement income products that you buy with a pension pot are no longer necessarily the ‘poor value’ alternative to income drawdown and may increasingly be worth considering for retired people.”

Richard Lane, director of external affairs and operating subsidiaries at StepChange Debt Charity, said: “The continued upward trend in interest rates is putting a significant strain on households, on top of existing cost-of-living pressures which show little sign of easing.

It's vital that firms treat borrowers fairly

“For those on the lowest incomes with the least financial resilience, housing arrears, among other types of debt, are a real risk this year.

“As recently emphasised by the FCA (Financial Conduct Authority), it’s vital that firms treat borrowers fairly, including tailored forbearance and signposting to free debt advice, alongside proactively identifying customers who may be teetering on the edge of problem debt.

“Financial difficulty can affect anyone at any time, and current circumstances mean there could be thousands of people struggling with debt in silence. We would urge anyone worried about rising mortgage rates and their ability to meet financial commitments to reach out for help as early as possible.”