Mortgage arrears at historic low

Ms Davies said that despite speculation the base rate increase could cause arrears and possessions to increase, data suggested it was likely the vast majority of households with a variable mortgage rate would still be able to cope if their lender passes on a small rate hike.

She said: "Lenders are acutely aware that any change to mortgage rates, combined with the impact of rate rises on other loans, can put pressure on household debt.

"This underlines the importance of borrowers having access to suitable mortgage deals – which is why our members recently pledged to do more to help a minority of UK borrowers who are stuck on reversion rates."

Last week, 59 authorised lenders committed to a cross-industry voluntary initiative announced by UK Finance, the Building Societies Association and the Intermediary Mortgage Lenders Association - aimed at helping borrowers stuck on reversion rates.