Millions of UK homeowners will see their mortgage repayments rise over the next three years as they refinance onto a higher rates, the Bank of England has warned. Average fixed-rate mortgage holders could see their monthly repayments rise by £64 when they refinance, with some households seeing larger increases, Sky reports.

Those on rolling fixed rates account for 43% of the country’s account holders, or approximately 3.9 million homeowners. It’s not all bad news, though, with those on variable rates expected to see payments fall within the same timeframe, according to the Bank’s bi-annual financial stability report.

The report, from the Bank’s financial policy committee (FPC), also highlighted a series of pressures on the UK’s finances, including “geopolitical tensions, fragmentation of trade and financial markets and pressures on sovereign debt markers” but concluded that its main banks could withstand the turmoil.

It confirmed that the UK’s biggest lenders, Barclays, HSBC, NatWest, Lloyds, Santander, Standard Charted and Nationwide, had passed stress tests – introduced after the 2008 crash to assess how banks would perform in a severe recession scenario.

The Bank also reduced its estimate for the level of capital reserves banks must maintain to safeguard against collapse in a major loosening of post-financial crisis regulations.

The lowered benchmark will be welcomed by Chancellor Rachel Reeves, providing banks with increased confidence to utilise their capital and lend to UK households and businesses.

The country’s banking system could continue to support its economy even if economic and financial conditions materially worsened, the FPC found.

Matt Britzman, senior equity analyst at Hargraves Lansdown, told Sky: “UK banks are offering a dose of optimism in what’s turning out to be a good couple of weeks for the major lenders.

“The UK’s even biggest banks sailed through the latest stress test, reaffirming their resilience and earning a regulatory nod to ease capital buffers.

“Most banks already hold capital well above the minimum by choice, so any shift in strategy may take time – but in theory, it frees up extra capital for lending or capital returns. However, they use the new freedom, this is another clear signal that the UK banking sector is in robust health.”