“Significant pressure” will be placed on the ability of households to meet their debts as monthly payments on around 4 million mortgages are expected to increase over the next year.
The Bank of England said in its Financial Stability Report that economic conditions had deteriorated, with UK households being “stretched” by rising interest rates and soaring inflation.
“The risk that indebted households will default on loans, or sharply reduce their spending, has increased,” the report said.