According to Citizens Advice, one in four mortgage holders will not be able to afford monthly payments if they raise £100

More than a quarter of mortgage holders could not afford their monthly repayments if they increased by £100 a month, according to a new Citizens Advice study.

Almost half (45 per cent) would not be able to make their payments if they increased by £250 a month, the organization said.

In September, 49 percent of Citizens Advice mortgage holders gave debt advice and said they were getting more money out of their finances than into it each month.

Citizens Advice estimates that this is the case for around 11 per cent of all UK mortgage holders.

The stark results underscore the risk of rising mortgage rates. Average interest rates remain above 6 percent after steep increases over the past month.

On September 23 (mini-budget day), the average interest rate on a two-year fixed-rate mortgage across all deposit sizes was 4.74 percent, according to Moneyfacts.

A little over a month later, on October 28, it was 6.53 percent. An increase of this magnitude would increase the monthly payments on a £200,000 25-year mortgage by £134, or an additional £1,608 per year.

The average for a five-year fix is ​​now 6.36 percent.

Experts are warning of a looming mortgage crisis as borrowers who fixed their rates two or more years ago got much cheaper deals and will see their spending soar.

Last year, Nationwide launched a product with an interest rate of just 0.87 percent and a 40 percent down payment.

At the time, TSB had an even cheaper offer of 0.84 percent for debt restructuring.

On the way up: Mortgage rates have risen sharply in recent months as rising borrowing costs have pushed homeowner prices higher

The problem is further exacerbated by the cost of living crisis, caused in part by inflation rates.

The consumer price index rose 10.1 percent in the 12 months ended September 2022, compared to 9.9 percent in August.

According to a Citizens Advice survey, one in seven mortgage holders has already reduced essentials, while one in ten has taken out expensive borrowing to make ends meet.

For mortgage holders on a negative budget who already can’t afford their loan payments, the number jumps to one in four cuts and nearly one in five using expensive borrowing.

Citizens Advice data paints a stark picture of a looming mortgage crisis when borrowers can’t afford to pay their monthly bills.

In a blog accompanying the data, Citizens Advice Policy Manager David Mendes da Costa and Citizens Advice Policy Manager Rachel Beddow wrote: “When people can’t afford their mortgage, one of three things happens.

“They can miss mortgage payments and default on their payments. You can reduce essential food and energy expenses. Or they can use credit to fill the gap and go deeper into debt.

“Of those three, it is the first where people are best protected. Mortgage lenders need to consider how they can help people in financial difficulty, for example by restructuring payments, granting payment deferrals and eliminating additional fees and charges.

“But the concern is that people aren’t getting that support and are instead forgoing essentials or going deeper into debt.”

According to Costa and Beddow, the FCA and Bank of England are currently at their lowest mortgage arrears in 15 years. However, they warn that this could be a sign that people are not reaching out to ask for help and risk deepening their debts or struggling without essentials.

You can get in touch with Citizen Advice or call Adviceline (England) on 0800 144 8848 or Advicelink (Wales) on 0800 702 2020.