Millions of UK households have been warned they face hikes in their mortgage repayments, with some increasing by as much as £500 a month.

The Bank of England warned that around 4.4 million households could see hikes to their mortgage repayments over the next three years.

The Bank’s Financial Policy Committee (FPC) said this will include £500-per-month hikes for the mortgages of around 420,000 households.

Meanwhile, between one million and 1.5 million people are set to see a second increase in rates, having already fixed to a higher price since interest rates started rising in the second half of 2021.

About 31% of all mortgages, or 2.7 million people, are expected to refinance onto a rate of more than 3% for the first time before the final quarter of 2027.

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A typical household rolling off a fixed-rate mortgage in the next two years is due to face a jump of around £146-a-month, the report said – down on the last projection of £180 in June.

But the central bank stressed that UK lenders are still in a strong position to support households and businesses, even if the economic backdrop worsens.

About 27% of mortgage holders, or 2.4 million people, are expected to see monthly payments decrease before the end of 2027, having already seen rates rise.

The central bank also said the overall risk environment for the economy and the financial sector has risen in the last six months after a swathe of new governments were elected across the globe.

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The Bank said risks to the financial system from wars, trade tension and cyber attacks were on the rise, adding that growing geopolitical tensions pose a “significant” risk to banks and broader financial stability.

Officials wrote: “Following elections in many countries, a range of macroeconomic and financial policies may change under newly-elected governments.”

In a survey of finance firms like banks and asset managers, “the proportion of those citing geopolitical risks reached its highest level” recorded by the poll.

This comes amid an escalation of Russia’s war in Ukraine in recent weeks, the ongoing war in the Middle East and the potential worsening of US-China relations.

US President-elect Donald Trump also recently vowed to slap higher-than-expected import tariffs on goods from Canada, Mexico and China, heightening fears of trade wars globally.

The Bank’s report on Friday did not mention Mr Trump, but pointed to the “potential to increased global fragmentation” of trade as part of the broader range of geopolitical issues.

It said trade fragmentation also “poses risks to UK financial stability”, while it could also “make it harder to achieve an orderly transition to net-zero greenhouse gas emissions”.