There is more mortgage pain to come for the UK’s homeowners, many of whom are yet to feel the full impact of rising interest rates, according to a think tank.

The trend towards homeowners taking out longer fixed-rate mortgages has delayed the impact on some households, with two-thirds of the eventual £12 billion increase in annual mortgage costs still to be passed on, the Resolution Foundation said.

The Bank of England increased the base interest rate to 4.5% from 4.25% on Thursday – the 12th rise in a row since rates started going up in December 2021.

The average mortgage holder could see their monthly interest payments jump by around £200 a month if they fixed to a new rate this year, the Bank’s economists estimated.

Simon Pittaway, senior economist at the Resolution Foundation, said: “While interest rate rises might be coming to an end, there will be plenty more mortgage pain to come.”

Around four-fifths (81%) of outstanding residential mortgages in December 2022 were fixed-rate deals, according to UK Finance figures. This group will not feel the immediate impact of base rate rises until their deal ends.

The foundation said that, while the Bank’s rate-rising cycle has been sharp, the growing popularity of fixed-rate mortgages and longer-term deals means many borrowers are yet to see the impact on their mortgage outgoings.

Of the 7.5 million mortgagor households that will eventually be affected by the rate-rising cycle since the end of 2021, around half have yet to see a change in their mortgage rate, the foundation said.

It added that mortgage costs are expected to remain elevated for some time.

Richer households, which are more likely to be mortgaged than poorer homes and tend to be more expensive properties, will face the majority of the £12 billion rise in mortgage costs, the foundation said.

Lenders stand ready to help anyone who might be concerned about their mortgage payments. If you're struggling, don't put it off - speak to your lender as early as possible

But it predicted that the scale of the living standards shock will be particularly high for those low and middle-income households who are affected.

Younger home-owning families, who tend to have lower incomes than older households and higher mortgages relative to incomes, will also face a sharp living standards hit, the foundation said.

The foundation is focused on improving living standards for people on low to middle incomes.

A spokesperson for trade association UK Finance said: “Lenders stand ready to help anyone who might be concerned about their mortgage payments. If you’re struggling, don’t put it off – speak to your lender as early as possible.

“Banks have a range of tailored options available to help. Your lender will work with you to find the best option for your individual circumstances.”

Pat McFadden, shadow chief secretary to the Treasury, said the report “demonstrates how last autumn’s Tory Budget continues to make Britain’s mortgage holders pay the price for this Government’s reckless economic gamble”.

The Labour MP said: “This Tory mortgage penalty has increased the cost of home ownership by hundreds of pounds each month, causing great worry for families while putting the prospect of owning a home further out of reach for many others.

“Rishi Sunak might want to forget the economic misery the Tories have caused, but the public can’t forget about it because they are still paying the price.”