A growing number of mortgage borrowers are struggling to cope with mortgage debt following the recent hike is home loan costs.

With millions of borrowers set to roll off fixed-rate mortgage deals during the course of 2023, the “lottery” of rising costs could see many middle-income households into financial difficulties, according to the Financial Resilience Barometer report from Oxford Economics and Hargreaves Lansdown.

Almost 90% of the lowest-income households have poor or very poor financial resilience, but almost one-third of middle-income households now also fall into this category, showing how higher mortgage costs are pushing the squeeze further up the income scale, research shows.

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, told the press: “Younger borrowers are particularly exposed, because they’re likely to have stretched themselves to buy when prices were higher.

“To add insult to injury, at this stage in life they’re also less likely to have as much savings to fall back on, so ramping up mortgage repayments could mean they end up building a mountain of short-term debt.”

Some lenders have reduced mortgage rates in recent days as the housing market slows, but they nonetheless remain at significantly higher levels than a year ago.

The average two-year fixed rate loan was 5.8% at the end of 2022, according to price comparison site Moneyfacts, up from 2.4% at the close of 2021.

The Financial Times has calculated that the difference would add an average of almost £500 to monthly costs based on a typical £250,000 repayment mortgage.

Although the headline rate of inflation is expected to start to fall in 2023, economists warn that the cost-of-living crisis is far from over as low-income households remain less financially secure than they were before the pandemic.

The last quarter of 2022 is expected to be the peak of the cost-of-living squeeze with nearly 40% of UK households having to cut back, raid their savings or take on debt to maintain usual levels of spending, Oxford Economics estimates.