Average monthly repayments are expected to rise by more than £400 for millions of households, according to Equifax data.

Andrew Goodwin, chief UK economic for Oxford Economics, said: “Fixed rate borrowers coming to the end of their terms in the next year will need to brace for significant increases to mortgage costs.

“This is a profound change from the post-global financial crisis period and will leave many with tough decisions.”

He added that inflation would probably settle around 11% for the next few months and then slowly fall to 4% by the end of next year.

Jayadeep Nair, chief product and marketing officer at Equifax UK, said there were “undoubtably tough decisions” for both borrowers and the credit industry as it adapted to the “quickly changing economic environment”.

He noted: “Rising interest rates will remain a concern for borrowers, especially as many on fixed rate mortgages brace themselves for significant rises in monthly spending in the next 12 months.

“How the industry identifies and cares for consumers who find themselves struggling is increasingly important. It remains paramount for the credit industry to keep pace with changing consumer habits to ensure that affordability criteria reflect the reality of the financial situation and continue to deliver outcomes for lenders and borrowers alike.”

Higher earners starting to struggle

Equifax’s research also showed that those earning over £40,000 accounted for around 3% entering individual voluntary arrangements in September this year.

This is up from just under 1% in May 2019.

Equifax said this was a “reminder that high income alone is no guarantee against problem debt”.

Delinquency rates for motor finance, defined as those falling into arrears or default on motor finance repayments, has risen almost 30% to reach a three-year high in October this year.

Nair said: “Delinquency rates are ticking up across most of the credit industry, but the motor finance sector has seen a sharp uplift in people failing to repay. In many ways this is not surprising; the debt-to-income ratio has grown markedly in recent years.

“Since 2009, the average amount borrowed for a new or used car increased by 100% and 87% respectively, while average weekly earnings increased by only a third, from £429 to £607.”