Homeowners on tracker deals will see their mortgage rates increase after the Bank of England pushed its base rate up to 4 per cent.
The rise from 3.75 per cent, announced on Thursday, was the first increase to borrowing costs in more than three years.
UK Finance calculated the average rise for a monthly payment at £30.72, based on typical outstanding mortgage balances.
Trackers account for 510,000 outstanding homeowner mortgages, or around 6 per cent of the total, according to the industry body.
A further 470,000 deals sit on standard variable rates, which borrowers may move on to once their initial deal ends and which are set by individual lenders.
Where a lender passes on the full 0.25 percentage point rise, the average SVR borrower faces a £14.28 increase to their monthly payments.
Fixed rates make up 87 per cent of outstanding homeowner mortgages.
People on fixed deals will not feel the immediate impact of the base rate hike on their home loan, but many will need to weigh their options in the months ahead.
Around 700,000 fixed-rate mortgages expire at some point in the second half of this year.
UK Finance's analysis also found that a further 2.3 million fixed-rate deals are due to expire in 2027.
The finance industry body is encouraging anyone who believes they may struggle with increased payments to contact their lender, where teams of experts should be standing by to offer support.
Andrew Montlake, chief executive of Coreco mortgage brokers, said: “For households, this is another turn of the financial screw.
“Tracker borrowers will see payments rise almost immediately, while those coming off fixed deals face a mortgage market already repriced for higher rates.
“The key message is not to panic. If your mortgage deal is ending, start early, understand your options and give yourself room to manoeuvre.”
Richard Donnell, executive director at Zoopla, said: “Higher mortgage rates have been a drag on housing market activity since the spring, with sales agreed down 8 per cent on last year and this latest increase in the base rate set to make more buyers pause and wait on their home buying decisions.
“While there are fewer sales than this time last year, sales that are being agreed are happening just as quickly as a year ago as serious buyers become more selective.
“There is demand to buy homes, but sellers need to price their homes carefully to ensure they attract the active buyers.”
Emily Williams, director of research at Savills, said that house price growth is forecast to accelerate to 5.0 per cent in both 2029 and 2030.
Simon Gammon, managing partner at Knight Frank Finance, said: “The Bank of England may be raising rates, but global events will exert the most influence on UK mortgage rates over the coming months.”
Jason Tebb, president of OnTheMarket, said: “Serious buyers and sellers continue to engage with each other but with the former having potentially less purchasing power after today’s announcement, the sensible pricing of property coming to market is essential.”
Nicky Stevenson, managing director of Fine & Country, said for prospective buyers, “understanding affordability, securing mortgage advice early and allowing some flexibility in monthly budgets will be particularly important in the current environment”.
Frances Haque, chief economist at Santander UK, said: “The key question is whether today’s decision is a precautionary move or the start of further increases.
“With energy prices facing further increases, inflation expectations rising and wage growth stagnating at levels above those consistent with the 2 per cent target, it certainly looks as if further hikes will feature in 2027.
“However, the question about how the economy reacts to all of this will be critical; the resilience it has shown so far has been remarkable, but the tension is mounting.
“For the time being, homeowners should prepare for borrowing costs to remain elevated.”
While some households will be dealing with larger monthly mortgage bills, the rise in the base rate will give some savers a boost.
Jenny Holt, customer savings and investment director at Standard Life, said: “For savers, higher interest rates could bring better returns on cash, although banks won’t necessarily pass on the full increase.
“With inflation still elevated, it’s important to consider whether savings are maintaining their purchasing power.
“It’s worth checking the rate you’re receiving and whether a more competitive account is available.”
Susannah Streeter, chief investment strategist at Wealth Club, said: “For savers, a rate hike could see even more attractive deals land in the market, and it’s really worth shopping around.
“Some easy access accounts are already paying in the region of 5 per cent, although the very best rates often come with restrictions, with even better offers available if you can stow away your money for a year or more.
“However, rates may not move significantly higher given that the market has already priced in the likelihood of further hikes.”
Rachel Springall, a finance expert at Moneyfactscompare.co.uk, said: “Savers must make time to review their old accounts.”
Sarah Pennells, a consumer finance specialist at Royal London, said: “Higher rates can be good news for savers, but it’s important to check whether your savings rate has increased and by how much.
“Shopping around and checking the rate you’re receiving can make a real difference.
“For anyone worried about their finances, now is a good time to take stock of regular outgoings and prioritise building a financial buffer where possible.
“If you’re worried about your mortgage payments or are struggling, speak to your lender as soon as you can rather than waiting until you miss a payment.
“The earlier you ask for help, the more options may be available.”
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