The financial markets are expecting a rise in the Bank of England base rate from 0.1% to 0.25% in December, according to Hargreaves Lansdown.

And the digital wealth management service said a further increase is forecast to 0.5% by March 2022, which could have a huge impact on some mortgage borrowers.

What happens if interest rates rise?

If the Bank of England’s Monetary Policy Commitee increases its Bank Rate, mortgage lenders are likely to follow suit with mortgage rates.

The good news is that they can’t change existing fixed rates so any borrowers currently on a fixed rate mortgage will see no change to their monthly repayments.

Borrowers on a tracker rate mortgage won’t be so lucky. Their payrate literally tracks the Bank Rate at an agreed margin, so they will see an automatic rise to their pay rate within a month of any Bank of England decision.

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The same goes if you’re on a variable rate, included a discounted rate or your lender’s standard variable rate, as Sarah Coles, personal finance analyst at Hargreaves Lansdown explained: “If you’re on a variable deal, your rate is likely to increase with the Bank of England’s changes, so you may want to consider bagging a fixed deal before this kicks in, and while there are still real bargains around.

“It’s worth doing this sooner rather than later, because when banks are convinced rises are on the way, fixed mortgage rates will go up well before any announcement. Fixed deals won’t suit everyone, especially if you need more flexibility, but they should always be a consideration.

“After 18 months of rock bottom interest rates, rises could be lurking around the corner, ready to deliver a nasty shock to anyone who has borrowed money. We all need to consider what it would mean for us, and take steps to protect our finances.”