A typical mortgage holder coming to the end of a fixed rate deal in the second half of this year will see monthly payments rise by around £220.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Borrowers due to come off cheap fixes face a real payment shock.”
The Bank expects house prices to fall “modestly’ in the coming months, as officials warned that more landlords were offloading their properties amid a jump in mortgage costs.
While rising interest rates are bad news for borrowers, they should also result in better returns for savers.
Nationwide and HSBC were among the first providers to improve savings deals following the Bank’s announcement.
Britain’s biggest building society announced its “Triple Access Online” cash Isa will now pay 4.25pc in annual interest, up from 3.5pc, with savers allowed to invest up to £20,000 in the tax-free wrapper each year.
From next week HSBC is increasing the rates on its instant-access “Premier” savings accounts by 0.25pc points, to 2.25pc and 2pc on some other accounts.
The City regulator has raised concerns previously that many high street banks are not fully passing on the benefits of higher rates to savers.
Mr Bailey said this was now changing. He said banks had boosted savings rates “pretty fully” after its last interest rate rise.
Figures compiled by MoneyFacts show the average interest rate paid on an instant access account rose from 2.35pc to 2.8pc between June and July.
That represents an increase of 0.45 percentage points, reflecting almost the entire 0.5 percentage point move by the Bank in June.
This compares with a much slower reaction when the Bank initially started to raise borrowing costs. When the Monetary Policy Committee (MPC) lifted the base rate from 0.1pc in December 2021 to 1.25pc in June 2022, the return to savers barely budged, creeping up from 0.1pc to 0.27pc over the same period, Bank data shows.
Threadneedle Street officials also said pay rises had continued to be stronger than expected, with the dangers of a wage-price spiral now beginning to “crystallise”.
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This notice was published: 2023-08-03 11:38:40