The Bank of England’s decision on whether to increase interest rate will be influenced by the severity of the latest hike in mortgage costs on households, according Catherine Mann, who sits on the Bank’s monetary policy committee.

She said that households had been “very resilient” in the face of inflation so far but added there are “concerns about what’s going to happen to households with a mortgage.”

The warning came after new figures released yesterday suggested the average London household could face a £7,300 annual increase in their mortgage costs if they refinance this year.

Until recently, most analysts had expected the Bank rate to peak at 5%, but with inflation still higher than anticipated at this stage, many City analysts predict peak of up to 5.5%.

Higher interest rates have been “reflected in higher mortgage rates… (consequently) householders will be exposed to significantly higher rates,” she said.

Consumer resilience in the face of rising rates will be “an important ingredient” for the rate-setting committee Mann said, and the Bank will keep a close eye on how higher rates transfer into “consumption headwinds”.

Mann’s comments come after Santander became the latest bank to temporarily pull a range of mortgage products.

Natwest has also increased rates on a range of its products, with large increases for buy-to-let mortgages.

Analysts at the Centre for Economics and Business Research reckon mortgage rates will average 5.1% in 2023 and 4.6% in 2024, an £8.7bn increase across the country for those coming to the end of fixed rates.

Benjamin Trevis, an economist at the think-tank, said: “While the Bank’s tightening cycle might be nearing its end, the impact on households is only just beginning.”