The report from Barclays Mortgages and the Centre for Economic and Business Research (Cebr) suggests under the scenario that interest rates rise to 1.25% over the next 23 months – currently considered the most likely outcome by their economists – the average home will have to pay an extra 3% or £252 a year on their repayments.

This would take total annual mortgage repayments by UK homeowners to £71.4bn by the end of 2015, up from £69.2bn today.

In the most extreme case, a scenario that Barclays Mortgages and Cebr termed “Drastic but Potential”, interest rates would rise to 1.75% in December 2015 and UK mortgage holders would have to pay £5bn more than they do today at the end of 2015.

Andy Gray, Barclays managing director of mortgages said: “In the face of a rise in mortgage rates and in the cost of living, it is vital for homeowners to review their current situation and get advice as to what their next mortgage step should be – so they remain financially flexible in the face of rate rises to come. The impending rise in mortgage rates that we can see from these scenarios will undoubtedly squeeze some homeowners.”

The report found Londoners will suffer most from rate rises on a monthly basis as the cost of a mortgage in the capital will rise by £384 each year per household on average – increasing from £12,384 per year to £12,768 on the “moderate” model.

Under the “Drastic but Potential” scenario Londoners will see an annual rise to £13,308.

Mortgage holders in Wales currently pay the lowest at an average of £483 monthly or £5,796 annually, and they would see payments rise by £180 each year according to the “moderate” model.

Homeowners in the South West of England who currently pay an average of £683 monthly or £8,196 across the year would see their repayments rise more greatly by £252 each year.

Monthly mortgage repayments by region for average mortgage holders (£ per month)

Source: Barclays Mortgages