A half point increase in mortgage rates would cost a homeowner with a typical £200,000 loan an extra £83 per month in interest.
Rates on two-year fixed rate mortgages have declined steadily to 5.26pc since they hit a peak of 6.65pc in October, according to Moneyfacts, a data company.
But these rates are based on a Bank Rate peak at 4.25pc or 4.5pc and lenders have no leeway to absorb further increases.
Andrew Wishart, senior property economist at Capital Economics, said: “Their spreads now look very narrow. We will probably see quite immediate pass-throughs from interest rate expectations through to mortgage rates.”
He added: “The perceived wisdom has been that mortgage rates are going to decline gradually, but that is over now.”
Mortgage rates will likely rise now even if the Bank Rate does not increase, because analysts expect it will stay high for longer, Mr Wishart added.
“If the Bank of England fails to get inflation down, you could definitely get to a 5pc Bank Rate,” he said.
Thomas Pugh, UK economist at RSM, said: “That points to mortgage rates increasing by a further half a percentage point.”
This will be a particular burden for the 1.4 million homeowners who are coming to the end of fixed rate mortgage deals this year, as they will already have to remortgage at far higher rates than they are used to.
“They are going to take a big hit to their disposable income. That hasn’t been felt yet but it will be over the rest of this year,” Mr Pugh said.
