Millions face remortgaging homes

Research found that 14% of households feel they would be forced to refinance their loan if a rate rise led to a mortgage repayment increase of up to £50 a month - representing around 2.6 million homeowners across the UK.

Around 40% of homeowners would be driven to remortgaging their home if monthly repayments went up by £100, survey results indicated.

Around 2,300 British adults were interviewed as part of study by price comparison website moneysupermarket.com.

It revealed that a quarter of mortgage holders affected by the last interest rate hike said they were financially stretched, struggling with repayments or having to sell or remortgage to keep afloat.

The Bank of England is expected to announce a further rate rise next week, with most commentators expecting a 0.25% increase.

Louise Cuming, head of mortgages at moneysupermarket.com, said: "The looming rate rise is of grave concern. We feel it could even be a 0.5% rise, which, according to the survey results will drive an alarming number of people into financial difficulty.

"Homeowners on a £150,000 interest-only tracker mortgage face additional costs of £750 per year, or £62.50 per month, for every 0.5% that interest rates rise.

"Assuming the May rate rise is 0.5%, many borrowers will have their mortgage repayments rise by 1.25% over the last 12 months - an increase of £156 a month, or £1,875 a year."

Research found that just 12% of borrowers were prepared for a further increase in their mortgage repayments and more than half of all homeowners would be forced to find a better deal if their mortgage payments increased by up to £150 per month.