The Times reports that Chancellor Rishi Sunak estimates interest rates will rise 2.5% over the next 12 months.
He says he reported it to the cabinet on Tuesday, adding that homeowners who are not on a fixed rate deal could see their mortgage payments increased by £1,000.
According to Trussle, the Bank of England raising the interest rate in March from 0.5% to 0.75% would have added more than £300 to the average mortgage, which came on top of increases in December 2021 and February, which together added £650 to the average mortgage.
According to the firm, 800,000 households are currently on the standard variable rate.
And the fixed rates themselves have been rising steadily since the end of 2021.
According to Moneyfacts, in January of this year, the two-year average fix was 2.38% and the five-year average fix was 2.65%.
As of Friday, the two-year average fix was 2.98%, while the five-year average fix was pegged at 3.11%.
The members of the Bank of England will then meet on May 5 to decide whether the base rate should move again or not. Many watches on the market think another raise is on the cards.
Amanda Aumonier, Head of Mortgage Operations at Trussle, says: “Given the recent history of low interest rates, many have not needed to keep an eye on their mortgage contract as there was no a lot of variability in tracking rates.
“However, with interest rate hikes set to continue like clockwork throughout the year, timing is now key. Owners could find a huge difference between securing a long-term deal now compared to the end of the year.