Annual payments on £300,000 mortgages could rise by £13,200 by the end of the year

Homeowners with a £300,000 mortgage could see their annual payments increase by £13,200 by the end of the year compared to 18 months ago, analysis shows.

Lenders have been hastily raising rates and withdrawing slews of deals in recent weeks amid predictions that Bank of England interest rates could reach 6 per cent.

HSBC withdrew its mortgage offers from the market for the second time in a week yesterday after the bank struggled to meet a deluge of borrower requests. The mortgage deals will be on sale again today at higher rates.

And one of Britain’s largest housing associations, Coventry, announced at 8pm yesterday that it was suspending its residential and buy-to-let deals from the market before launching new, more expensive products on Friday.

Chancellor Jeremy Hunt warned the UK has “no alternative” but to raise interest rates again to curb runaway inflation. He said the government would be unconditional in its support for the Bank of England ‘to do whatever it takes’ to slow the pace of price increases, which is now the ‘biggest challenge we face’.

The Bank is widely expected to raise base rates from the current level of 4.5 percent, the 13th consecutive hike in just 18 months.

Stronger-than-expected growth in wages and the UK economy has put further pressure on the Bank of England to raise interest rates in an effort to curb inflation.

Financial markets suggest interest rates have a one-in-three chance of hitting 6 percent by the end of the year.

Mr Hunt said: ‘We understand there is a lot of pressure on households with mortgages, on businesses with loans, as interest rates rise. Ultimately, there is no alternative to reducing inflation if we want consumers to spend, if we want to see companies invest, if we want to see long-term growth and prosperity.”

The Bank of England admitted yesterday that it had underestimated inflation and succumbed to pressure to revise its forecasts.

Lord Macpherson, a former Permanent Secretary to the Treasury, suggested the Bank will have no choice but to raise interest rates so high that a recession becomes inevitable next year. He criticized the Bank of England for “lagging interest rates” and signaled further pain for homeowners as bond yields continue to rise.

The cost of British government borrowing reached its highest level since the financial crisis on Tuesday, surpassing the level seen in the aftermath of Liz Truss’ mini-budget last September.

HSBC withdrew its mortgage offers from the market for the second time in a week yesterday after the bank struggled to meet a deluge of borrower requests. The mortgage deals will be on sale again today at higher rates

Experts warn that this will send further shockwaves to the mortgage market.

So far, the rate hikes have added £9,564 a year – or £797 a month – for homeowners with a standard floating rate mortgage of £300,000, according to broker L&C Mortgages. About 1.6 million homeowners have an SVR mortgage, which typically grows with the base rate. But further mortgage payment shocks are on the way as interest rates continue to rise.

An increase in the base rate to 6 per cent by the end of the year, as widely predicted, would increase amortization on a £300,000 mortgage by £13,231 a year, or £1,103 a month, compared with 18 months ago, so according to analysis.

It came as data showed the UK economy rebounded in the spring as households exploded despite tight finances. The Office for National Statistics said output rose 0.2 percent in April, following a 0.3 percent fall in March