A 2 per cent rise in interest rates would see around a third of mortgagors need to take action to work more, spend less or renegotiate their mortgage payments, according to a survey by NMG Consulting for the Bank of England.

The number of potentially vulnerable households would be around 12 per cent of all households. However, in most cases, interest rate rises are only likely to happen if there is also a rise in wage growth. If there was a 10 per cent rise in wage growth, the impact would be substantially less.

The Bank of England suggests that mortgagors become vulnerable when their mortgage repayments hit 40 per cent of their net income. This is currently around 4 per cent of UK households, equivalent to 360,000 people. This would rise to 6 per cent if interest rates rose 2 per cent and there were a 10 per cent rise in wages.

Economic theory suggests that economies become more vulnerable to interest rate rises the longer interest rates remain low, but the survey suggested that households were less vulnerable than a year ago. The size of the average outstanding mortgage was broadly unchanged over the year to September and stands at around £83,000, but households reported modest increases in income relative to the previous year’s survey.

Households continue to be concerned about the prospect of interest rate rises. The survey asked households why they were concerned about debt. The most frequently cited reason for such concerns was the possibility of being unable to meet repayments if interest rates rose, with 36 per cent of households reporting this as being a concern, compared with 33 per cent in the 2013 survey.